Prospect Medical, which mostly serves low-income patients, has suffered a litany of problems: broken elevators, dirty surgical gear, bedbugs and more. Its owners, including Leonard Green & Partners and Prospect's CEO, have cashed in.
This article was published on Wednesday, September 30, in ProPublica.
In the decade since Leonard Green & Partners, a private equity firm based in Los Angeles, bought control of a hospital company named Prospect Medical Holdings for $205 million, the owners have done handsomely.
Leonard Green extracted $400 million in dividends and fees for itself and investors in its fund — not from profits, but by loading up the company with debt. Prospect CEO Sam Lee, who owns about 20% of the chain, made $128 million while expanding the company from five hospitals in California to 17 across the country. A second executive with an ownership stake took home $94 million.
The deal hasn't worked out quite as well for Prospect's patients, many of whom have low incomes. (The company says it receives 80% of its revenues from Medicare and Medicaid reimbursements.) At the company's flagship Los Angeles hospital, persistent elevator breakdowns sometimes require emergency room nurses to wheel patients on gurneys across a public street as a security guard attempts to halt traffic. Paramedics for Prospect's hospital near Philadelphia told ProPublica that they've repeatedly gone to fuel up their ambulances only to come away empty at the pump: Their hospital-supplied gas cards were rejected because Prospect hadn't paid its bill. A similar penury afflicts medical supplies. "Say we need 4x4 sponges, dressing for a patient, IV fluids," said Leslie Heygood, a veteran registered nurse at one of Prospect's Pennsylvania hospitals, "we might not have it on the shelf because it's on 'credit hold' because they haven't paid their creditors."
Bottom of FormIn March, Prospect's New Jersey hospital made national headlines as the chief workplace of the first U.S. emergency room doctor to die of COVID-19. Before his death, the physician told a friend he'd become sick after being forced to reuse a single mask for four days. At a Prospect hospital in Rhode Island, a locked ward for elderly psychiatric patients had to be evacuated and sanitized after poor infection control spread COVID-19 to 19 of its 21 residents; six of them died. The virus sickened a half-dozen members of the hospital's housekeeping staff, which had been given limited personal protective equipment. The head of the department died.
The litany goes on. Various Prospect facilities in California have had bedbugs in patient rooms, rampant water leaks from the ceilings and what one hospital manager acknowledged to a state inspector "looks like feces" on the wall. A company consultant in one of its Rhode Island hospitals discovered dirty, corroded and cracked surgical instruments in the operating room.
These aren't mere anecdotes or anomalies. All but one of Prospect's hospitals rank below average in the federal government's annual quality-of-care assessments, with just one or two stars out of five, placing them in the bottom 17% of all U.S. hospitals. The concerns are dire enough that on 14 occasions since 2010, Prospect facilities have been deemed by government inspectors to pose "immediate jeopardy" to their patients, a situation the U.S. Department of Health and Human Services defines as having caused, or is likely to cause, "serious injury, harm, impairment or death."
Prospect has a long history of breaking its word: It has closed hospitals it promised to preserve, failed to keep contractual commitments to invest millions in its facilities and paid its owners nine-figure dividends after saying it wouldn't. Three lawsuits assert that Prospect committed Medicare fraud at one of its facilities. And ProPublica has learned of a multiyear scheme at a key Prospect operation that resulted in millions of dollars in improper claims being submitted to the government.
Leonard Green and Prospect, which have operated hand-in-glove throughout this period, both declined requests for interviews. (Near the end of the reporting for this article, Prospect's CEO, Lee, spoke to ProPublica on the condition that he not be quoted.) Leonard Green and Prospect responded to ProPublica's questions in written statements through Sitrick and Company, a crisis PR firm jointly retained on their behalf. They maintain that they've kept their commitments, abided by the law, provided good patient care and invested hundreds of millions of dollars, saving many failing hospitals and preserving thousands of jobs. "Prospect Medical Holdings is a healthcare system that provides compassionate, accessible, quality healthcare and physician services," the statement asserted.
The question of whether profits and good medical care can coexist is not a new one in the United States. But that tension is particularly acute in the case of Leonard Green and Prospect, where private equity has extracted hefty profits from a business that acquires struggling hospitals and relies on Medicaid and other government programs to pay the bills for its impoverished patients.
"It's such a brutal case of unabashed greed," said Rosemary Batt, a professor at Cornell University's School of Industrial and Labor Relations, who has studied private equity's involvement in healthcare. "We're talking here about safety-net hospitals that are serving the poor, the unemployed, disproportionately people of color. They're just doing this immoral sucking out of resources. That is beyond the pale."
Prospect's story is also a bleak omen for the future of America's healthcare system — and a particularly telling one because the company is effectively on its second tour through the private equity system. The business model for private equity firms like Leonard Green involves stripping cash out of the organization, loading down operations with debt and reducing every conceivable expense. After that is accomplished, firms then usually resell the operation to another buyer within five years.
The saga of Leonard Green and Prospect embodies a broader trend. Starting around 2010, giant private equity firms like Cerberus Capital Management and Apollo Global Management rushed into the hospital business, buying up facilities and assembling chains. Their moves intensified a shift to for-profit ownership among the nation's 5,200 general hospitals: from about 15% for-profit in 2000 to 25% for-profit in 2018, the most recent year for which data is available. The biggest corporations still own more hospitals than private equity firms: HCA, for example, owns about 180; Apollo claims 89 and Cerberus had 37 at its peak, before selling this year.
Almost as quickly as it rose, private equity firms' ardor for hospitals has "substantially cooled" in the past few years, said Lisa Phillips, editor of HealthCareMandA.com, which tracks private equity healthcare deals. "I've seen the whole M&A market for hospitals dry up."
Making quick profits from operating hospitals proved daunting. "There's so many other places to put their money in healthcare that they can flip faster," Phillips said. (The firms have lately turned their sights to outpatient clinics or staffing emergency rooms.) "Private equity really wants to see growth fast and get out," Phillips said. "They've squeezed it as dry as they can."
Those actions have made it hard for the firms to sell hospitals, according to Eileen Appelbaum, senior economist at the Center for Economic and Policy Research, who studies private equity. "They're loaded with debt and anybody sensible is not prepared to buy them."
Indeed, Leonard Green is now on its third attempt to sell Prospect. Other firms, facing growing losses, have placed some hospitals into bankruptcy and closed others, offering up their real estate while seeking to sell the rest of their medical operations at bargain-basement prices.
The exodus isn't necessarily good news, according to Batt and other experts. As they see it, this is merely the latest stage in a slow descent to the bottom. Given the cash and assets that private equity owners have already taken out of hospitals, their new owners will be left with heavy debt and limited resources — as the saga of Leonard Green and Prospect demonstrates. Faced with that financial plight, these hospitals will be compelled to cut costs even further, making it ever harder to deliver quality care.
Just over two decades ago, Sam Lee and the private equity firm where he then worked were among the first such firms to invest in hospitals — and it started almost by accident. In 1998, most private equity firms avoided healthcare. The industry was complicated and highly regulated, both anathema to private equity. Kline Hawkes, the young Los Angeles firm where Lee worked, had made only one previous healthcare investment, in a medical instruments company. The founder of Kline Hawkes was an investor named Frank Kline, who told ProPublica that no person named Hawkes was ever involved with the firm. Kline picked a British-sounding name to add a dash of gravitas.
In 1998, Kline Hawkes was approached by David Topper, a veteran hospital marketing executive who was seeking funding to buy eight struggling little hospitals in the LA area (one would be immediately sold) and assemble them into a company called Alta Healthcare Systems. Then 49, Topper started Alta after recovering from a fire at his home that left him on a respirator, with third-degree burns over 70% of his body.
Kline was skeptical. He relented only after a bit of salesmanship: Topper surprised him by turning up at a dinner meeting with 15 doctors who promised to send patients to Alta's hospitals. It convinced Kline that Topper could deliver growing revenues. He decided to invest, putting up $3 million in equity toward the $34 million purchase price. Alta borrowed the rest.
Kline assigned Lee, then 32, to oversee the investment. Lee's experience was in finance, not medicine. Born in South Korea and raised in Tampa, Florida, he was an industrial engineering graduate of Georgia Tech. Lee had worked for Andersen Consulting ("as a grunt," he later explained in a deposition) and a Florida software company before getting an MBA at Harvard and joining Kline Hawkes.
Lee was whip smart, could be charming when he wanted to and preferred to operate behind the scenes. He hasn't been quoted in the press in more than 20 years. (In recent years, his wife's Facebook account has shown him celebrating holidays with her and their three college-age sons; family vacations in Maui, Aspen and Las Vegas; and pilgrimages to the Super Bowl and the American Music Awards.)
Lee became "super-involved" in overseeing Alta even as Kline Hawkes quickly found an exit, according to Kline. Just three years after investing $3 million, the firm cashed out in 2001 with $5.3 million, a 73% profit. Already deeply indebted, Alta had to borrow more to pay the $5.3 million.
For his part, Lee decided to stay. He sensed a major opportunity, according to a corporate history his spokesman provided: "While the cost of healthcare was growing at three times the rate of the US GDP, hospitals as a group were inefficient in delivering quality care." Lee quit the private equity firm in 2000 and joined Alta full time, becoming its co-president and a 50-50 partner with Topper. Lee became the primary decision-maker. Topper's main role was to be Alta's salesman, schmoozing doctors and nursing home administrators to feed Medicaid and Medicare patients into their small community hospitals, located in low-income neighborhoods.
From the beginning, Lee and Topper brought the cost-slashing philosophy of private equity firms to Alta and its hospitals, according to interviews with former executives and multiple lawsuits. The effects were felt almost immediately.
Critical medical equipment and supplies, including drugs and tracheotomy kits, were "routinely unavailable" at Alta's hospitals because bills hadn't been paid, according to a breach of contract suit later filed by a former Alta chief operating officer named Michael White. According to the suit, the company regularly "changed vendors to avoid payment" and "bounced checks as part of its regular cash management process." (White's suit was later settled.) The portrait offered by White was affirmed by other executives, including Paul Smith, a former vice president for finance at Alta, who told ProPublica he recalled "having to switch vendors sometimes because we would get cut off." Emergency room staff in at least one Alta hospital lacked chemical reagents needed to perform critical enzyme tests on heart attack patients, according to another former Alta executive who sued the company. Employees sometimes had to spend their own money to buy toilet paper for patients.
The stringent penny-pinching wasn't enough to generate profits at first. Some of Alta's hospitals, according to company filings with the California health department, were averaging 30% occupancy. According to White's lawsuit, Alta lost a cumulative total of $35 million through the end of 2002. In April 2003, Lee and Topper abruptly shut down two of their hospitals, placing them into bankruptcy (and eventually liquidation), while selling a third. Lee disputed some of White's claims, but acknowledged in the company's written responses that this was "a difficult time," resulting in "some bounced checks and some payables being missed." He insisted that "ultimately, all the vendors were paid."
Shedding those money-hemorrhaging operations helped Alta turn a financial corner. By cutting costs and maximizing government reimbursements at its remaining facilities, Alta started to eke out profits from its four remaining hospitals. "Their model was really about just bare minimum," said Mike Heather, who later helped Prospect acquire Alta and served as Prospect's CFO from 2004 through 2013. Alta's facilities "were sort of war-zone hospitals. They were very, very dirt cheap in every respect."
Things began looking up for the business. Occupancy climbed, and individual hospitals began reporting growing profits — though perhaps not as much as Alta's financial reports suggested. "When you looked on paper, it was a beautiful turnaround," said Jack Lahidjani, who was Alta's CFO from 2003 to 2006. The reality, he said, was that Lee was "putting out aggressive financial statements."
Lee "fought tooth and nail" to hike Alta's reported profits in 2006 by booking inflated estimates for forthcoming Medicaid revenues, according to Michael Bogert, who prepared Alta's audited financial statements for Moss Adams LLP, the company's accounting firm. "He had our partners convinced I was being too conservative," said Bogert, now executive vice president for corporate finance at Prime Healthcare, a Prospect rival. Lee convinced a Moss Adams senior partner to overrule him — something that had never happened, Bogert said, during more than 300 previous hospital audits. (Moss Adams declined to comment.)
The rosy numbers helped attract a buyer for Alta in 2007: Prospect Medical Holdings, a small, publicly traded company that managed 10 physician groups. The deal paid off Alta's debt and netted Lee and Topper $50 million each in cash and Prospect stock. Those shares were enough to give Lee and Topper control of Prospect. Their ambitions were only growing.
The merger nearly wrecked Prospect. Just weeks after the deal closed, Prospect's audit firm, Ernst & Young, discovered inflated revenues and profits on Alta's books. (The E&Y senior manager assigned to examine Alta's financials told ProPublica the misstatement was "very easy" to find.) As a result, Prospect was unable to complete its Securities and Exchange Commission filings, forced to cancel its annual shareholder meeting, delisted from the American Stock Exchange and defaulted on its loans, triggering millions in lender penalties. In April 2008, Alta restated its 2006 revenues, lowering them by about $4 million. In the restatement, filed with the SEC, Moss Adams explained that Alta had misused and ignored "factual information that existed" at the time it compiled the inflated financial statements. (Prospect told the SEC the company's investigation had found no "intentional wrongdoing." Lee, in his statement to ProPublica, dismissed the significance of the Alta restatement and said the bigger problem at the time was that Prospect was in far worse shape than he'd been led to believe.)
Despite the turmoil, Lee became CEO of Prospect and consolidated power. He acquired a moldering flagship hospital, the 420-bed Brotman Medical Center, in Culver City, California, out of bankruptcy; replaced Ernst & Young; fired and sued the company's outside law firm; and ousted Prospect's 74-year-old founder, Dr. Jacob Terner. A year later, Lee halted payment on Terner's exit package. (Terner, who has since died, sued and won the full $1 million he was due, plus legal fees, in court.)
Michael Terner worked as an executive vice president at Prospect for five years and departed around the same time as his father. He says his dad covered for Lee after the merger by soft-pedaling Alta's accounting problems only to have Lee turn on him. "You'll find," Terner said, "if you go through the history of Sam Lee, there's a lot of corpses."
Indeed, the trail of litigation, unpaid bills and accusations was already lengthy. Two former senior executives at Alta claimed that Lee and his longtime partner had cheated them out of a promised equity stake. Minority investors in Brotman accused Lee of cooking its books to defraud them. Dozens of lenders, executives, doctors, staffing agencies and hospital vendors filed lawsuits and court claims over unpaid debts and broken agreements. Three law firms hired by Alta later sued for unpaid bills. Lee professed his innocence and fought the actions, typically settling for discounted amounts. The pattern would continue at Prospect.
Lee was demanding and unrelenting, according to people who worked for him. "One day you're like a superstar and the future of the company," said Steve Aleman, who became Prospect's CFO in 2013. "The next day you're absolutely in the doghouse."
(Last fall, Lee abruptly terminated Aleman, who then filed suit claiming he is owed for unpaid compensation and canceled company stock options. Aleman is now CFO of Prime Healthcare. In its responses for this story, Prospect made an array of unsubstantiated allegations about Aleman's workplace conduct during his 12 years at the company. A Prospect lawyer also wrote Aleman, accusing him of making "false and defamatory" statements to ProPublica. In a letter responding to the company, Aleman's lawyer denied that his client made any defamatory statements. Aleman confirmed to ProPublica the accuracy of his comments in this article. In addition, Prospect made accusations about the conduct or character of seven other former executives and employees critical of the company, including two other former CFOs of Prospect or Alta. Aleman called the charges an "offensive smear campaign that Prospect is attempting against myself and others who are no more than victims of Lee's broader plan to enrich a few and hurt many.")
Lee churned through executives and could turn brutal, screaming at subordinates or grilling them over a tiny issue. "He'd go through three hours of literally just peeling the skin off somebody," Aleman said. Lee would make executives cry, recalled former Alta CFO Lahidjani, who counted himself in that category.
Meanwhile, the CEO whittled costs to the bone by finding cheap sources for medical supplies; through "real-time" monitoring of hospital staffing; and slow-walking every vendor payment. "He was very proud of making it impossible to get a dollar out," former CFO Heather said. "He would just not pay people as a way to negotiate. He would shut off things you'd say it was crazy to shut off."
Through its spokesman, Prospect said "we do not have a slow-pay policy at Sam Lee's or anyone else's direction." It said the company's implementation of a new financial system over the past 12 months has caused a number of vendor payment delays and "credit holds."
Prospect was far less obsessive about patient care issues, according to former company executives. "That quality component was always lax in my opinion," one said. "It's always the bottom line." In public testimony a few years ago, Prospect executives acknowledged the point. "As an organization, we had delegated the role of the quality program to a local level," Senior Vice President Von Crockett testified, "without the proper oversight at a corporate level."
By 2010, the investing trends had changed. Big private equity firms were flooding into the hospital business. Leonard Green, a firm known for its investments in marquee consumer brands like Whole Food Markets and Neiman Marcus, joined the rush.
Prospect's business, which involved spending as little as possible and squeezing profits out of Medicare and Medicaid reimbursements, while using Prospect's physician groups to generate patients, didn't fit the pattern. But Leonard Green viewed Prospect's approach as one that could be applied widely and used to acquire more hospitals and reap more profit. Lee was eager to expand, too, confident that his business model could be applied to many more struggling hospitals, multiplying the company's revenues from about $470 million in 2010 to several billion.
Leonard Green struck a deal that aligned Lee's financial interests with its own. In addition to more than $2 million a year in salary and bonus, he would get 20.2% of Prospect's shares (and dividends). Topper received a 14.9% stake, while Leonard Green got 61.3%. The rest was distributed in the form of stock options to Prospect's top executives, to whom Lee dangled the possibility of a big future payoff.
Leonard Green's point man for the Prospect stake was a former investment banker named John Baumer, a graduate of Wharton and Notre Dame, where his father had worked as the university's comptroller. At Notre Dame, Baumer and his wife have endowed the lacrosse team's head coaching position ($3 million) and funded a new men's dormitory ($20 million). The Baumers live about 30 minutes from the firm's Santa Monica offices in a large oceanfront property on Manhattan Beach, purchased, through a corporate entity he set up, for $18.4 million.
Baumer and two Leonard Green colleagues, who together made up a majority of Prospect's five-member board, left day-to-day healthcare operations to Lee. The private equity board members focused on profits — and wasted little time in beginning to reap returns.
In 2012, Prospect paid Leonard Green and its investors a total of $188 million in two rounds of dividends. Prospect raised the money by issuing junk bonds. Only two years in, the private equity fund had made back most of its $205 million investment.
As Prospect cranked up its ambitious expansion plans, it consistently told the targets of its acquisitions and the government regulators who needed to approve them that it was in the business of saving troubled hospitals. "We haven't closed hospitals, and we don't close services," Dr. Mitchell Lew, Prospect's president, said at a Connecticut public hearing in March 2016. "We're in this for the long term, OK?"
Lee's first out-of-state acquisition would erase that claim. In 2012, Prospect paid $48 million for San Antonio's Nix Health System. Nix included a 208-bed downtown hospital, an inpatient psychiatric center and multiple outpatient clinics.
Nix was an unusual acquisition for Prospect. It was profitable and had a higher federal quality rating, with four out of five stars, than any other Prospect hospital. Yet Prospect claimed the role of savior. In a press release announcing the deal, Lee said the company "will help ensure the long-term success of Nix."
That success didn't last long. Prospect removed Nix's longtime CEO in 2015 and established control from headquarters in LA, while cycling through four more CEOs in the next four years. Doctors who had long relationships with Nix stopped referring patients. After decades of profits, Nix began losing money.
In 2019, after repeatedly promising to keep at least part of the system open, Prospect shut it all, laying off nearly 1,000 employees. The company sold Nix's downtown building to a hotel chain and exited with a big loss. "It was mismanaged at the corporate level," Aleman said. "It went from making about $20 million to losing money. It was an absolute disaster."
In its responses to ProPublica, Prospect blamed the failure on a "catastrophic" broken water pipe in 2016 that flooded "the entire hospital infrastructure," forcing doctors and patients to go elsewhere for months. "Volume and physicians," the company said, "never returned to pre-flood levels."
Prospect is now poised to shutter another acquisition it eagerly pursued: East Orange General, outside Newark, New Jersey. In late 2015, Prospect outbid two other companies with a $44 million offer for the 196-bed hospital, then in bankruptcy and losing more than $2 million a month.
Prospect vowed to spend $52 million on capital improvements and keep the hospital open for "no less than five years." Three years into that vow, with losses still running about $1 million a month, Prospect's warnings that it wanted to sell or close the hospital spurred state lawmakers to hand the company an "emergency" $15 million grant.
Lee couldn't find a buyer, Aleman said: "They would have just given East Orange away — literally handed over the keys. They wanted to get rid of it at all costs." In its statement, Prospect said it will keep East Orange open into 2021 while it continues to seek a buyer and thus "will surpass our five-year commitment of operating the hospital." The company also said it has met its $52 million capital-spending promise under provisions of its purchase agreement that allow it to count debt payments and routine maintenance costs toward that total.
In Rhode Island, Prospect was welcomed as a savior in 2013 when it agreed to pay $45 million for controlling ownership of two money-losing Providence-area hospitals: 220-bed Roger Williams and 359-bed Our Lady of Fatima. Eager to save jobs, Fatima's powerful United Nurses & Allied Professionals union endorsed Prospect's bid.
State regulators, who had to approve the sale, had two big concerns. The first was the $188 million in dividend payouts previously made to Leonard Green and other investors. Those payments raised fears that Prospect wouldn't fulfill its pledge to spend $90 million on capital improvements over four years. No problem, Prospect responded; it wouldn't pay out any more dividends. "Prospect's management and representatives have given assurances that this was a one-time event and that there are no plans to make a similar distribution in the foreseeable future," the Rhode Island attorney general noted in his written findings on the hospitals' sale in 2014.
Employee pensions was the other issue. The retirement plan for Our Lady of Fatima, which 2,700 past and current hospital employees were counting on, had been woefully underfunded since 2008. The problem had escaped federal ERISA oversight because of the hospital's affiliation with the Catholic Diocese of Providence, making its pension system a legally exempt "church plan."
The size of the problem was a secret. During negotiations over the sale, Prospect was repeatedly briefed on actuarial studies showing that even after a $14 million contribution that Prospect agreed to make, the plan would run out of money by 2036, while still owing about $98 million in retirement benefits.
After learning this, Prospect negotiated contract language freeing it from any future pension liability. The retirement system, and its massive funding deficit, would become the responsibility of a nonprofit community board, which had no reliable source of income.
Prospect officials never disclosed the plan's dire straits during the state approval process. Instead, retirees nervous about Prospect's purchase were shown a PowerPoint presentation stating that Prospect's one-time contribution would "stabilize plan assets." Lee attested in writing that the payment would "assure that the pensions and retirement of many former employees, who reside in the community, are protected." Prospect told the attorney general that any necessary future payments would "be made based on recommended annual contribution amounts as provided by the Plan's actuarial advisors." Remarkably, no one addressed who would actually make such payments. Rhode Island approved the purchase in 2014.
Over the three years that followed, neither Prospect nor anyone else paid a penny into the pension plan. In 2017, the system was declared insolvent and placed in receivership. The court-appointed receiver has filed multiple lawsuits accusing Prospect and the diocese of "omissions and half-truths actionable as fraud," demanding that they help make the pension whole. The cases are all pending.
In its statement, Prospect noted that its purchase agreements for the hospitals "clearly spell out" that the company had "no responsibility" for funding the pension plan. It also said it would have been "economically impossible" for Prospect to take over liability for the retirement system and called the receiver's allegations about the company's actions "false and unsubstantiated." Both Prospect and the diocese deny concealing the pension system's condition.
Meanwhile Prospect sought to cut costs by reducing the workforce, trimming benefits and tightly monitoring each hospital's patient count throughout the day from its LA headquarters, sending nurses and aides home whenever possible in mid-shift.
After hearing about a consultant's 2017 report describing dirty and damaged operating room instruments, the union at Fatima requested documents about this and other problems revealed by various inspections. Prospect refused, and failed to turn over any of the materials, despite an order to do so from the National Labor Relations Board in April 2019, affirmed by the 1st U.S. Circuit Court of Appeals in March 2020.
Prospect asserts that it promptly addressed the consultant's concerns about dirty and damaged surgical instruments, but that it viewed the report as "proprietary" and thus "availed itself of the court system." The company added: "As we recently received a ruling from the Federal Court to produce the document, we have complied with the order."
Prospect has yet to hand over any documents, according to the union. "Prospect is lying in claiming that they've complied with the order," union general counsel Chris Callaci said. Dealing with the company, he added, has been "a parade of horribles."
Many of these problems had yet to emerge by 2015, as Prospect struck rapid-fire deals to double the company's size. That's when it reached agreements to spend more than $500 million to buy hospital systems in three states: East Orange General, in New Jersey; three community hospitals in Connecticut; and a four-hospital system in suburban Delaware County, Pennsylvania, west of Philadelphia. Prospect promised to spend hundreds of millions more on pension and capital improvements.
Prospect was reporting revenues of about $1 billion in 2015, with operating profits of $108 million. After digesting the acquisitions in the pipeline, the company projected, revenues and profits would surely soar.
Leonard Green was now ready to fully cash in and exit its investment. In October 2015, the firm hired Morgan Stanley to find a new private equity buyer for Prospect. The company's 92-page "confidential information memorandum," prepared for prospective acquirers and obtained by ProPublica, promoted the company's "cost-effective care" model, including daily "flex" management of hospital staffing, use of low-cost sources for medical supplies and a focus on high-profit programs for treating the seriously mentally ill.
Bain Capital and CVC Capital Partners were the two final bidders. Both made offers around $1.2 billion, according to sources familiar with the talks. Then, in early 2016, U.S. capital markets tightened amid fears of a recession, dashing the company's hopes to get even more. Lee decided to hold off on a sale. Aleman said the discussed reasoning was that Prospect could bring a far richer price after mining its pending acquisitions for bigger profits.
But a new problem had emerged behind the scenes during this period: improper Medicare billing. The issue, described in internal documents obtained by ProPublica and interviews, involved "unsupported" reimbursement codes submitted by Prospect's physician-management business, whose dramatically increased profits the company had promoted to potential buyers. The problem was discovered in August 2015 during a routine compliance audit by nurses with Inter Valley Health Plan, a California HMO that sent Medicare Advantage patients to Prospect doctors and, as a result, had shared in the improper windfall (unknowingly, according to Inter Valley).
Inter Valley promptly notified Prospect, which expressed skepticism that anything was wrong, according to Inter Valley chief operating officer Susan Tenorio. "They really didn't take us seriously," she said. "The response was: 'We do this all the time. Nobody has questioned it.' That's when I went back to our CEO and said, 'There's a problem here.'"
Inter Valley began investigating, with help from a law firm and outside consultant. It found that Prospect had submitted an estimated $22.6 million in potentially improper charges, which the federal government had already paid. Several million dollars more in improper claims, not yet processed, had to be canceled, according to Inter Valley. Inter Valley's CEO and its chief compliance officer then sent a letter detailing their findings to the Centers for Medicare and Medicaid Services in August 2016.
The letter, obtained by ProPublica, reported that Prospect had submitted thousands of claims dating back to 2013 that were "not supported by audited medical charts." It added: "In many instances, diagnosis codes were submitted for dates of service for which there was no evidence in a medical chart confirming that the [Prospect physician] had a face-to-face visit with the beneficiary." Most of this "upcoding" involved claims that individual patients had made two visits to Prospect doctors on the same day. "We reported everything," Inter Valley CEO Mike Nelson said. Everyone on Inter Valley's board, he added, accepted that its organization had been reimbursed for false charges. "Making it right is what we should do," Nelson said.
Prospect, Inter Valley and a hospital used by the plan's patients had to repay the federal government for the improper income they'd received. Nelson said the three parties set aside a combined $22 million to cover the reimbursements while CMS completed its still-unfinished audit of how much is due. (CMS did not respond to requests for comment.)
Prospect's own consultant, Alvarez & Marsal, largely confirmed Inter Valley's findings in September 2016 in a confidential draft document reviewed by ProPublica. Alvarez & Marsal was also concerned the problem extended far beyond what Inter Valley had discovered: that Prospect had submitted bogus claims for more than 20 other Medicare Advantage plans, including United Healthcare and Blue Shield.
Another of the Medicare Advantage plans that received payments because of Prospect's improper claims, CalOptima, said in a statement that Prospect first informed it in March 2016 of an "inadvertent and isolated" billing error from a single month in 2015. Months later, Prospect acknowledged the problem was far more widespread. It eventually turned out there were 3,847 "erroneous" claims over four years, requiring $2.8 million in repayments to CMS, including $1.7 million from Prospect. Because the improper claims were eventually self-reported, the government has taken no action against Prospect.
The ultimate total cost to Prospect from the improper billing episode, including expected income the company lost as a result, was in the tens of millions, Aleman estimated.
Prospect asserted that its cost was actually $8.5 million and that "management was unaware" of any inappropriate billing until after the fact. The company blamed the episode on the vice president who had presided over all reimbursement submissions, who was fired. In an interview, the woman, who asked not to be identified, told ProPublica, "They blamed me for something I didn't do." Inter Valley's Tenorio called her "a scapegoat."
Meanwhile, three lawsuits have charged Prospect with different allegations of billing fraud at its flagship hospital in Culver City. According to a pending suit filed by Charles Harper, a 28-year employee who served as director of cardiopulmonary therapy, the hospital fraudulently billed Medicare for individual respiratory therapy while regularly requiring its staff to treat two patients at the same time, a practice known as "stacking." Harper claims he was fired for complaining about the wrongdoing. (Prospect denies any improper billing and says Harper's job was eliminated because of diminished demand for respiratory services.)
A second lawsuit filed in federal court claimed the hospital inflated Medicaid revenues at its Miracles detox center by admitting financially needy or homeless patients with "no medical reason for being hospitalized for chemical dependency." The plaintiff, a former nurse there who sought whistleblower status for the suit, alleged that some patients were admitted so often, without undergoing standard addiction screenings, that the staff referred to them as "frequent fliers." Federal prosecutors ultimately declined to join the case but allowed it to proceed as a private action against Prospect and the hospital under the False Claims Act. Prospect settled in 2017, agreeing to pay $275,000 while asserting that the claims were "wholly without merit."
The third suit alleged an "illegal patient procurement scheme" to generate fraudulent Medicare and Medicaid claims. Christina DeMauro, an emergency room nurse at Culver City for six years, asserted that a special team of hospital "marketers" generated a stream of about 20 elderly patients a day, most suffering from chronic dementia, who were admitted through the ER despite having no problems that required hospitalization.
According to her suit, these patients were brought from nursing homes and other senior facilities, "many well over 100 miles away," when their Medicare benefits there, capped at 100 days, were about to expire. After an unnecessary hospital admission requalified them for Medicare benefits, the patients were then returned to their facilities, according to the suit, boosting government billings for both Prospect and the senior facilities. Filed in 2018, the case remains pending in Los Angeles. DeMauro alleges that "unlawful retaliatory conduct" she faced after complaints about these practices forced her to resign.
Don Andrews, a seasoned administrator who worked as emergency department director during part of this period, backed these claims in an interview with ProPublica. Andrews said Prospect marketers insisted that elderly mental health patients "from nowhere near Culver City" be admitted through the emergency room even when no psychiatric beds were available in the hospital. He says this routinely resulted in a handful of patients being held for days in a crowded ER "overflow" area with no beds or privacy — just chairs and a single bathroom — serving as a sort of "bootleg inpatient psychiatric unit." A few years before Andrews got there, one 79-year-old man suffering from dementia disappeared after being left unattended in the overflow area, according to a state inspection report and a lawsuit by his family. His body was later found on a beach 7 miles away; the man had drowned. The "overflow" area remained in use until about 2018, when it was permanently locked, hospital employees said.
Prospect's spokesman denied DeMauro's allegations but declined to address specifics because her litigation is pending.
This same hospital, the company's largest, is also the most visible monument to Prospect's neglect. Long called Brotman Medical Center, it is best known for its burn center, which treated Michael Jackson in 1984 after his hair and jacket caught fire during the filming of a Pepsi commercial.
In 2013, four years after buying the hospital, Prospect grouped Brotman with two of its other hospitals, renaming it Southern California Hospital at Culver City. The move, made to qualify for extra government subsidies for treating low-income patients, helped Brotman generate profits.
But Brotman has continued to deteriorate. In 2015, inspectors shut down all elective surgery at the hospital for eight days, citing a "widespread pattern" of poor infection control and sterility; the problems resulted from inadequate heating and cooling systems. That episode, as well as the death of the ER-overflow patient whose body was found on the beach, resulted in immediate jeopardy findings.
That same year, state health inspectors cited the hospital after a broken refrigeration system in its morgue caused a woman's corpse to decompose so badly it produced a "noticeable stench," making it impossible for her family to have an open-casket funeral. Meanwhile, one of the hospital's elevators has been out of order for 10 months. Patients needing MRI scans must be taken outdoors and down an alley, past dumpsters and into a hospital parking lot, where the scan is done in a rented trailer.
Prospect said it quickly resolved all immediate jeopardy findings, something a hospital is required to do to remain eligible for federal reimbursements. It said it is "working with state and local officials to expedite" the broken elevator's replacement. And it said it is "not uncommon for hospitals to utilize a mobile MRI," but plans are underway to relocate the MRI inside a nearby building.
When it rains in Culver City, water drips from ceilings throughout the hospital's two buildings, forcing staff to relocate patients and plant orange buckets in the hallways. In 2014, a patient's wife filed suit after soaked ceiling tiles fell and struck her in the head while she was sitting in the hospital lobby. This January, a giant brown mold formation burst through the wall near a fourth-floor nurses' station. Noted the resulting complaint to the California health department: "There are mushrooms growing out of the wall (which they cut off and patched back up). There is leakage from the ceiling when it rains you can taste the mold in the air."
A water leak at Prospect's hospital in Culver City. (Courtesy of SEIU-UHW)
Employees told ProPublica the problem has persisted for years and provided photographs and videos documenting numerous leaks as well as the mold growth. Prospect asserted, by contrast, that "all leaks are identified and fixed as they occur." The company said roof replacement has begun on the main patient building.
A 2018 state inspection found the pharmacy staff at the Culver City hospital had for months ignored findings of "fungal air growth," "bacterial organisms" and mold in equipment used to mix patient medications in a sterile environment. According to the report, this resulted in the dispensing of about 21,000 doses of "adulterated dangerous drugs" to patients over a nine-month period. In September 2019, California's attorney general formally charged Prospect executives, including Lee, the hospital and its supervising pharmacists, with "gross negligence," initiating proceedings to revoke or suspend the hospital's pharmacy permit. The matter remains pending. Prospect asserted that "no patient harm occurred" from the "error," which has been corrected, and said the pharmacy is now "fully operational."
Eventually, word of Prospect's practices spread, causing alarm when the company sought to acquire new hospitals in other states. As Connecticut in 2016 weighed whether to approve Prospect's purchase of three hospitals, the state sent a team to California to investigate five recent immediate jeopardy findings, which had placed one Prospect hospital license on a "termination track" for cutoff of Medicare and Medicaid funding.
Prospect executives tap danced, alternately denying problems and explaining away the repeated findings of imminent threat. SVP Crockett testified, for example, that "there was no specific patient harm" that occurred, while insisting Prospect acted aggressively to address the "allegations," including by creating new posts for a "chief quality officer" and a "vice president of regulatory affairs and patient safety."
The company claimed it would act differently in the new states it was entering. "What happened in California certainly is concerning," Prospect's president, Lew, acknowledged at the hearing. "… And so, we're not bringing California's quality program to Connecticut," he said. "If you want to look at us as performing an 'F' on the test in California, that student is not coming here to tutor Connecticut on quality, OK?"
As it turns out, Prospect hasn't earned stellar grades in Connecticut either. State officials approved the company's acquisitions on a conditional basis in 2016, while imposing a three-year monitoring regime that health department officials describe as unprecedented. Before the monitoring period expired, two of Prospect's newly acquired Connecticut hospitals were slapped with immediate jeopardy findings.
This time, two patient deaths triggered the jeopardy findings. In 2018, Manchester Memorial Hospital mishandled two high-risk pregnancies: One woman died after delivering a stillborn baby; a second gave birth to an infant with severe encephalopathy, a form of brain damage, after an emergency cesarean section was performed too late. Waterbury Hospital was found to have failed to properly monitor two suicidal patients on a single day in March 2019. In one case, staff returned a belt to an "actively suicidal" psychiatric patient who then used it to hang himself in his hospital bathroom. After his death, the hospital failed to notify police. A second patient attempted suicide by tying hospital socks around his neck after being left unwatched while a nurse went to lunch.
The Joint Commission on Hospital Accreditation responded by initially denying Waterbury's accreditation, required to receive Medicare and Medicaid funding, after an inspection that found 42 quality standards "out of compliance." In December 2019, Connecticut regulators extended the monitoring of the state's three Prospect hospitals until May 2021.
More failures appeared in the company's biggest purchase yet, agreed to in late 2015: the four-hospital Crozer-Keystone system in Pennsylvania. Prospect paid $300 million. It made other promises as part of the deal: to spend an additional $200 million in capital improvements within five years; to keep all the hospitals open for a decade; to fund $171 million in pension benefits within five years; and to endow a community healthcare foundation for $53 million.
Almost immediately, Prospect began contesting the agreement. Always eager to delay and reduce a big outlay, Prospect deferred $21.5 million of the foundation funding for 90 days — and then refused to make the payment altogether, challenging how much it owed.
The foundation sued, eventually extracting Prospect's agreement to submit the matter to arbitration while putting the money into escrow. When Prospect then missed the escrow deadline, the foundation began garnishing the company's accounts and sought to have a receiver appointed over all its financial transactions. Prospect finally paid, 18 months late, after the arbitrator awarded the foundation $23.7 million, including interest. (Prospect's spokesman said the matter was "referred to the court" because efforts to resolve the amount of the payment were unsuccessful.)
At Crozer-Keystone, as elsewhere, Prospect has aggressively moved to lower costs. It sought, unsuccessfully, to reduce nurses' accrued vacation time and to cut pension benefits for all employees who didn't work full time. The company has also waged a four-year battle to halve the tax assessments on all its hospital properties. (Prospect says it believes the assessments are excessive and will pay "once a final ruling is given as to what is fair and proper.")
In November 2018 came yet another immediate jeopardy finding. This one stemmed from patient-safety violations in a mental health ward at 300-bed Crozer-Chester Medical Center, the system's largest hospital. According to state health department inspectors, video monitors at a nurses' station for maintaining watch over suicidal patients were turned off or ignored; an activity room was left unattended as psychiatric patients milled about; patients were placed in restraints or in seclusion without proper documentation; and facilities in the locked unit treating elderly psychiatric patients, some of them suicidal, presented multiple hanging hazards.
Hospital workers have regularly reported staffing shortages, sometimes forcing delays of scheduled medical procedures. Two medical employees at Delaware County Memorial Hospital are lead plaintiffs in a national class action against Prospect, claiming insufficient staffing regularly forces hospital employees to work, unpaid, through meal breaks. The company denies the allegations, including that any of its hospitals suffer from staffing shortages.
As elsewhere, Prospect's failure to pay bills on time has delayed repairs and resulted in supply shortages. At Delaware County Hospital, veteran nurse Angela Neopolitano said a call-bell system in one unit, which patients use to summon help from nurses, has been broken for more than two years. "Creditors would not come in to fix things because the hospital owed them money," she said. "Then we suffer and the patients suffer."
Paramedics have repeatedly gone to fuel up ambulances using a hospital credit card, only to have it rejected, according to Larry Worrilow, assistant chief for the Crozer-Keystone EMS system. "It'll be fine for six or eight months. And then, all of a sudden, boom — you can't get fuel," said Worrilow, who has worked there since 1977. "After you rattle their chains, they pay part of the bill, get their credit hold lifted, and you can get fuel." (Prospect said the card was rejected because it placed a charge limit on it as a security measure, and "when it was brought to our attention that the account was reaching the credit limit frequently, we increased the credit limit to ensure there was not disruption of services.")
The system's eight ambulances are so old — two have more than 275,000 miles on them — that they frequently break down, according to Worrilow. "There's plenty of times when we went to go on an emergency call and the ambulance wouldn't start," he said. "You have to send the next closest ambulance. Or you get to the scene and the ambulance won't run."
COVID-19 caught many of America's top medical centers by surprise. But Prospect's penchant for scrimping on staff and medical supplies left its hospitals with little margin for error.
In Rhode Island, for a time in March, hospital employees at Our Lady of Fatima were threatened with discipline for wearing their own masks, even though the hospital didn't have enough to give them. Nursing assistant Doreena Duthily, who worked in the geriatric mental-health ward, where 19 of 21 patients were infected, was out sick for three weeks with COVID-19 herself. Duthily blames the hospital's frequent rotation of its limited staff to different floors for spreading infection. Six members of the environmental services staff, responsible for cleaning patient floors, also got sick. On May 1, department supervisor Jerald Ferreira, 63, died of COVID-19.
"We were probably about three weeks behind every other hospital in getting just the basics," said Fatima RN Lynn Blais. "All of a sudden COVID comes in, everybody should have surgical masks, and we don't have two days' worth of surgical masks, much less two months of surgical masks. We were caught with our pants down. That germ was all over the floor."
In Culver City, nurses unable to get proper protective gear for a time donned plastic garbage bags. ER secretary Chudi Long says she became infected after being denied a mask despite working in close quarters with COVID-19 patients. After her breathing grew weak while she was battling the virus at home, Long was rushed to another hospital's ER, where she lost two front teeth during an emergency intubation, and spent seven days on a ventilator.
Prospect denied it ever lacked PPE at any of its hospitals.
Leonard Green may not have been involved in Prospect's day-to-day management, but it has popped up periodically to make sure it gets a return on its investment. In 2018, less than four years after assuring a state attorney general that it had no plans to seek new dividends, Prospect attempted to do just that. It began preparing to issue a $600 million dividend. As always, the plan envisioned funding that payment through debt.
Moody's, the ratings agency, was dismayed by Prospect's soaring debt. It lowered the company's credit rating in response. As a result, Prospect reduced the dividend to $457 million. In a letter to Rhode Island officials, Prospect insisted it didn't violate the pledge it made back in 2014 because "in 2014, no dividends were planned."
That $457 million raised the total in dividends extracted from Prospect since Leonard Green acquired it to $645 million. Roughly $386 million had gone to Leonard Green's investors and the firm (which gets 20% of all fund profits); $128 million to Lee; $94 million to Topper; and the remaining $37 million was divided among other Prospect executives. (Another $14 million in fees went to the private equity fund.)
Having collected that cash, Leonard Green made a second attempt to exit the investment in June 2018. By this point, Prospect had grown to 20 hospitals. Detailed management presentations to the two 2015 finalists were followed by dinners in Beverly Hills, leading to informal discussions with CVC, which was contemplating a considerably richer offer this time, according to Aleman. (CVC declined to comment.)
But once again, the sale collapsed. As Prospect headed toward the September close of its 2018 fiscal year, its business began deteriorating rapidly, torpedoing the projections it had given potential buyers. Recognizing that the bad numbers would surely blow up the deal, Leonard Green and Lee decided to hold off again. (The statement from Green and Lee denies they tried to sell the company in 2018.)
The situation grew dire. By January 2019, Prospect had so little cash that it needed an emergency $41 million loan from Leonard Green, Lee and Topper to assuage auditor fears that the company might not remain "a going concern" and to avoid violating loan covenants, according to Aleman. In March, Moody's downgraded Prospect's debt a notch deeper into junk territory, citing the company's "very high financial leverage, shareholder-friendly financial policies, and a history of failing to meet projections."
Eager to raise capital, Prospect sold its land and buildings last fall in a sale-leaseback transaction that allowed the operations to remain in the facilities. The company raised $1.55 billion. Prospect used much of the cash to pay off its loans. It had effectively replaced its debt payments with rent payments.
The sale of the land and buildings brought in much needed cash and stabilized the company. But it also meant that Prospect had shed by far its biggest asset, sharply reducing the value of the company. When Leonard Green made its third attempt to exit, the nominal price was a pittance.
In October, the private equity firm agreed to sell the firm's 60% stake to Lee and Topper for $12 million in cash plus the assumption of $1.3 billion in lease obligations. The $12 million was to be paid by Prospect, not the two executives. As Prospect and Lee put it in their statement for this article, "In effect, the company's money is their money."
To Lee's management team, who dreamed of stock option riches, it was an outrage. The low cash price would value their shares and options at a pittance, dashing their expectations of a windfall. A "drag-along" provision of the agreement would force all shareholders to sell immediately, rather than wait and hope for a better price. In February, Aleman, who'd been stripped of his stock options when he was suddenly fired last fall, filed suit in California, seeking restoration of his shares and payment of his 2018 bonus. (Under agreements Prospect makes virtually all employees sign, the case is scheduled to go to arbitration.)
For Leonard Green, the exit made a certain sense. As of this year, when the firm hopes to close the sale, Green has retained its Prospect stake for 10 years; indeed, the $5.3 billion fund that holds that and other investments was launched in 2007, making it venerable in private equity years. That fund has doubled in value overall, according to data on its investors' websites. All told, for all investments in the fund over 13 years, ProPublica estimates Leonard Green has made more than $1.5 billion for itself from fees and its share of the fund's profits. (Through its spokesman, Leonard Green said this figure was wrong and that the firm would "not respond to inaccurate guesses.")
It is leaving a mess behind at Prospect. The company has little cash, weighty pension debts and lease commitments, and uncertain future earnings.
Some current and former management shareholders, working with Aleman, contemplated trying to recruit another buyer who would pay a far higher price. But when an email exploring this effort was accidentally sent to Prospect, the company responded by dispatching a letter to Aleman's attorney, accusing the former CFO of "colluding with others in an attempt to interfere with a Company transaction." It demanded that he "immediately cease and desist."
Leonard Green's sale to Lee and Topper requires approval from state officials in Rhode Island, since it involves hospitals there. The officials have postponed their decision until November, saying there are missing documents and unanswered questions. And opponents there are making a stand. The Private Equity Stakeholder Project, a union-backed research group, has produced detailed reports criticizing Green's history with Prospect. It has lobbied public-pension investors and members of Congress to press the firm to return its dividends to the company, saying its profiteering has put Prospect's safety-net hospitals at risk. The Fatima union and the pension fund's receiver have opposed the sale too. "I don't know the answer, but I think there's something wicked going on here," Max Wistow, the receiver's special counsel, told a public hearing. Citing Leonard Green's history with the hospital company, the Rhode Island state treasurer has said he will block any future investments by his state, which sunk $20 million into the fund that owns Prospect, in the private equity firm's funds.
Leonard Green defended the transaction to state officials and a Rhode Island congressman, writing that the sale price reflects Prospect's "future obligations" and was agreed to by "sophisticated investors" who wanted "to not burden the company with additional debt." The firm added: "We reject any implication that we have managed Prospect in a financially irresponsible fashion or that we have put our own financial interests ahead of the interests of the hospital system. Prospect today is at no risk of financial failure."
Given Sam Lee's prowess at squeezing cash out of ailing institutions, Prospect undoubtedly will find profits left to extract. What it will have to offer patients is less clear.
Armed private police patrolling Cleveland's medical zone and the city streets around it disproportionately charge and cite Black people, even though most hospital employees, patients and visitors are white.
This article was published on September, September 28, 2020 in ProPublica.
A few minutes after noon on a September day in 2018, Jacarvi Jackson and Darcell Williams were crossing Euclid Avenue, a main road through Cleveland’s medical area. Both of them worked for a vendor that supplies food to patients at the world-renowned Cleveland Clinic. Still in their work uniforms after finishing their eight-hour shifts at the hospital’s loading dock, they were heading to a Burger King lot where their cars were parked. They were in a hurry — Jackson was worried about getting to his classes at Cleveland State University — and didn’t take the crosswalk.
A police cruiser was coming toward them. Eric Parks, the officer inside, rolled down his window and shouted at Jackson and Williams to use the crosswalk. When they didn’t, Parks pulled up and drove onto the sidewalk curb to block their path, they said. Parks then jumped out of the cruiser, grabbed Jackson, bent his arm behind his back and pinned him against the vehicle. Parks held him there for several minutes as two more officers responded to the scene.
In a police report, Parks said that the pair initially refused to provide identification, and that he held Jackson against the cruiser because “I felt he might strike me.” Parks and a second officer, Steven Jevnikar, wrote that Jackson and Williams cursed repeatedly, complaining that the only reason they had been stopped was because they were Black.
Parks also said Jackson had begun to flee, which Jackson and Williams denied. Jackson said he had no reason to run away. He was steps from his car, his clinic identification badge was draped around his neck and he was carrying a backpack filled with textbooks. According to Jackson, Parks told the other officers, “They usually run.” It was clear, Jackson said, that the comment referred to Black people.
Jevnikar apparently mocked Jackson’s distress. When Jackson, his lip quivering, was “staring me down,” Jevnikar wrote in his report, “I asked him if he was having a stroke.”
Parks cited Williams and Jackson for jaywalking. “I was scared as hell,” Williams said. “It was traumatizing.”
Bruised and in pain, Jackson immediately went to the clinic emergency room, missing his class. “I felt violated,” he said. “These people are supposed to be protecting me.”
Even though this incident took place on a public street and sidewalk, the officers who confronted Jackson and Williams were not Cleveland police. Instead, they were part of Cleveland Clinic’s private force, which is granted policing powers by the city.
These hospital cops don’t just handle disturbances in hospital corridors or emergency rooms. In look and practice almost indistinguishable from Cleveland police, the clinic’s 153 officers are armed, make arrests and stop motorists on city streets, including major commuter routes. Along with smaller private police departments operated by University Hospitals and the nonprofit University Circle economic development group, they patrol the city’s medical zone, an island of prosperity and promise that cuts through one of the poorest sections of Cleveland.
On Tuesday evening, Cleveland Clinic and University Circle police will help provide security for the first presidential debate, which will be held on the clinic’s main campus. At the same time, the three private police forces illustrate a little-known dimension of a pervasive problem that has drawn national attention this year and is likely to come up in the debates: racial inequities in law enforcement. As if posting a “Keep Out” sign, private police in Cleveland’s largely white and affluent hospital zone disproportionately cite and criminally charge Black people, often for traffic violations or misdemeanors such as trespassing, jaywalking and possession of marijuana. Some Black people who are charged or cited, like Jackson and Williams, work at the clinic; others are simply passing through the area.
Racial disparities in enforcement of low-level offenses are characteristic of police departments nationwide, said Lynda Garcia, director of the policing campaign at The Leadership Conference on Civil and Human Rights in Washington. Trespassing and marijuana possession “are not violent crimes and they are generally used to harass folks,” she said. “In more affluent areas, they give officers the grounds to stop people, arrest them and keep them away from these areas. For all those reasons, they are problematic. There is no real pressing public safety issue.”
The tens of thousands of people who work in the hospital corridor along Euclid, are treated as patients there or drive its streets are predominantly white. Yet most of those cited and charged by the private police agencies along Euclid Avenue and surrounding roads are Black, according to court data obtained by ProPublica.
Since Jan. 1, 2015, private police officers operating in the area on Euclid that begins at the sprawling clinic main campus and stretches to the University Hospitals complex have brought more than 8,000 criminal charges and traffic citations against 5,600 people in Cleveland Municipal Court. Nearly three-fourths of those arrested or ticketed are Black, well above the percentage of Black people among the area’s workers and visitors.
The proportions were even higher for the two criminal charges most commonly filed by the private police. Since 2015, the three private forces have issued criminal charges of trespassing to 466 people. Nearly 9 in 10 of those — 405 in all — were against Black people. Similarly, Black people comprised more than 90% of the 242 people charged with misdemeanor possession of less than 100 grams of marijuana.
Overall, nearly 90% of the people charged by two of the private forces — University Hospitals and University Circle — are Black. The Cleveland Clinic’s disparity was less extreme but still significant. Almost 7 out of 10 individuals charged by the clinic were Black.
As part of their agreements with the city of Cleveland, the three private police departments in 2018 were required to set up civilian boards to review complaints. They were supposed to do so within 30 days, but the clinic said it established a review board this past May; University Hospitals and University Circle said they are in the process of doing so.
In written responses to ProPublica’s findings, the clinic said that it reviews data annually “to ensure there are no concerns for biased policing.” It did not say whether those reviews have indicated any concerns. Statistics that it supplied to ProPublica show that almost two-thirds of the people it arrested in 2018 and 2019 were Black. Of the 275 people arrested in 2018, 65.1% were African American and 27.6% were Caucasian. Arrests soared to 425 in 2019; 64.7% of those arrested were African American and 28.2% were Caucasian.
The clinic said that it issues most of its criminal trespass citations outside traditional business hours, and most individuals found to be on its campus without a “legitimate business purpose” come from the local area. “As a result, the racial composition of those citations will generally reflect the racial composition of the City’s neighborhoods,” it said. Its police issue a verbal and written warning to first-time trespassers, and then can cite or charge them if they trespass for a second time within six months, it said.
Clinic police participate in “robust community outreach initiatives that include working with community partners and local schools to educate residents and students on crime prevention and security awareness,” it said. The clinic seeks to recruit a diverse group of officers that reflects the community, and its officers undergo training in diversity, inclusion and unconscious bias, the clinic’s response said.
University Hospitals said in a statement that its forthcoming civilian review committee will “enhance oversight” of its police department and “reflect our commitment to equitable treatment, social justice and safety.” The committee will be “fully empowered” to “examine individual incidents and practices in the department,” the hospital said.
The hospital also said that its officers “do incredible work” and are trained in diversity and de-escalating situations. It said that its police have issued citations to 260 people since the beginning of 2018 — an average of three individuals cited per officer per year. “We very carefully examine situations when citations are issued and take steps to fully address any concerns,” the hospital said. Unlike the other private police departments, University Hospitals did not comply with ProPublica’s request for disciplinary records. A spokesman said that University Hospitals was “leaning toward the side of caution” to protect patients’ privacy.
Chief James Repicky of the University Circle police said that the nonprofit’s lawyer is reviewing a proposal to establish a review board. He said that his officers don’t target Black people, and that traffic in the area largely flows from predominantly Black communities. “The city of Cleveland is probably 60% Black and we are next to East Cleveland, which is 90% Black,” he said. “It is what it is. We are not looking at color but basically trying to slow people down.”
Cleveland’s population is 50% Black and East Cleveland’s, 91%, according to census data. The ZIP code that includes the clinic, University Hospitals and University Circle is racially diverse, 42% Black and 41% white. Neighboring ZIP codes are as much as 93% Black. The picture changes when the employees, patients and visitors who saturate the area every day are included. University Hospitals said patients at its Cleveland center reflect the demographics of the northeast Ohio market, which is about 75% white. In addition, 62% of the 8,500 employees there are white.
The Cleveland Clinic would only provide patient and employee demographics for its entire system, which includes other locations in northeast Ohio as well as hospitals in Florida and Nevada. The system’s patients in 2019 were 77% white and 15% Black. Its employees break down similarly with 73% white and 16% Black.
Some nearby residents support the extra policing provided by the private departments. “It’s a force multiplier with a lot of deterrence,” said City Councilor Blaine Griffin, who represents the area.
Since George Floyd’s death in Minneapolis brought the issue of racist policing to the forefront, protests and investigations have focused on public departments. Left largely unexamined has been the universe of private police at hospitals, universities, amusement parks and other venues. In a 2017 national survey by Campus Safety magazine, 1 in 4 hospitals reported its public safety staff was “sworn police officers.” Across the country, these private police receive little public oversight or scrutiny even though they carry weapons and often operate with full police powers — usually granted to them by the state or city they operate in.
In Ohio, there are currently more than 1,000 police officers certified by the state at about two dozen hospitals. The nonprofit OhioHealth system, including Grant Medical Center in Columbus, has more than 140 special police officers, according to the Ohio secretary of state. Although Grant doesn’t have the memo of understanding with the city that is required to meet the legal definition of a police force, and its officers don’t have the power to make arrests, they are certified by the state and attend Ohio’s police academy.
In 2017, two hospital officers and a security guard at Grant Medical Center were suspended after a video surfaced of a Black man being hit with a baton, pepper-sprayed and forced to the ground during a confrontation outside the facility. Hospital police alleged that the man, who was visiting a family member working at the hospital, swung at security personnel when asked to leave the premises. Based on their statements, Columbus police charged him with disorderly conduct. The charge was dismissed.
A witness who recorded the video told The Columbus Dispatch that the police used excessive force. The hospital president said at the time that, while the officers followed protocol, they had an opportunity to “exercise more compassion, coupled with good judgment,” and that “we deeply regret what happened.” Afterwards, OhioHealth provided training in unconscious bias and de-escalation techniques, spokesman Mark Hopkins said.
The Cleveland Clinic employs more police officers than all but six cities in Ohio and is the third-largest police agency in Cuyahoga County, with more officers than the Cleveland suburb of Parma, which has 78,000 residents and covers 20 square miles. In addition to the main campus and adjoining streets, clinic officers also patrol other hospitals and properties it operates in northeast Ohio. University Hospitals’ police force has 29 officers and a K-9 unit. University Circle has 21 full-time officers.
Hospital police officers in Cleveland undergo similar training to city police. They must complete the state police training academy program before applying for three-year appointments with the secretary of state. Applicants are generally required to have high school degrees and meet certain physical fitness standards.
The clinic police created a traffic enforcement unit after a speeding driver with a suspended license ran a red light on the clinic campus and killed a patient in June 2018. In connection with the new initiative, Parks issued 14 jaywalking citations between Aug. 27 and Sept. 24, 2018. All but three of the people he cited, including Jackson and Williams, were Black.
Almost 30% of the clinic’s officers are Black, according to its data. Craig Kirkwood, who is Black, was the third clinic officer who responded to the jaywalking incident involving Jackson and Williams. When Kirkwood arrived at the scene, he said, the situation was spiraling out of control. He tried to defuse tensions and support Parks. He told Jackson and Williams that he understood why they were upset, but if they wanted to complain, they should follow up with a supervisor. If they kept arguing on the street, they would lose.
Still, Kirkwood said, he objected to the way Parks dealt with Black suspects. “To me, he is biased,” he said. “He doesn’t have respect for the people in the community he is in. He goes and does what he wants.”
Parks did not respond to requests for comment. Of 65 individuals he has charged or cited since Jan. 1, 2015, 31, or 48%, were Black.
Jevnikar, the other officer at the scene, declined to comment. “I was advised by my superiors that I cannot speak with you,” he said.
Kirkwood was fired last year by the clinic after five years on the force for three instances in which he allegedly violated department policy, including a physical altercation with a suspect outside a clinic building. Kirkwood, who denies any wrongdoing, filed a federal lawsuit alleging he was treated differently because of his race. The lawsuit was dismissed. The clinic said Kirkwood used excessive force against three African Americans within a short period of time and was “appropriately terminated.”
Williams and Jackson filed written complaints with the clinic’s police department about how they were treated. The clinic said that it couldn’t find the complaints, but that they were investigated by a police commander, who determined that there was no wrongdoing by the officers and that the jaywalking citations were appropriate.
One of the other jaywalkers cited by Parks in 2018 was Vernetta Bates, a health coordinator at the clinic. In an interview, she said she was crossing a quiet side street when Parks, who had just corralled another Black jaywalker on the same cut-through, motioned to Bates to come over to them. He was “really, really nasty and mean to us,” she said. As Parks wrote out their tickets, Bates said, some white clinic employees, several in doctor’s coats, jaywalked without penalty. (Parks cited four jaywalkers that day, one of whom was white.) Bates, who said she had never received a ticket before, paid a $162 fine.
Just as the Black Lives Matter movement has highlighted racial inequities in law enforcement, so the lopsided toll of Black victims in the pandemic has revealed them in health care. Hospital policing is where these two disparities collide. Cleveland’s prestigious hospitals, which mainly employ and treat whites, are surrounded by low-income Black neighborhoods with some of the worst health outcomes in Ohio, including lower life expectancy and high rates of asthma, diabetes and infant mortality.
Hospitals have replaced the factories and plants of a faded industrial era as the most important economic engine in northeast Ohio. The clinic surpassed Walmart last year to become Ohio’s largest employer, with more than 50,000 employees. It is consistently ranked as one of the top three hospital systems in the country in both quality of care and size.
Revenues for the clinic system, which also includes hospitals in two other states and three countries, were just over $10 billion in 2019. The presidential debate will take place in the Samson Pavilion, which features a massive steel roof and soaring 80-foot-high indoor courtyard. It’s the centerpiece of a half-billion-dollar health education campus that opened last year.
In many other cities, University Hospitals would be the biggest health care system. As it is, the UH system is the second-largest employer in northeast Ohio. Its 2018 revenues topped $4 billion. The hospitals are separated on Euclid by the campus of Case Western Reserve University, which has its own police force.
University Hospitals said it has formed a Social Justice & Equity Team across the institution to “address the issue of racism and its effects on our patients, caregivers and the community we serve.”
Both University Hospitals and Case Western are located within the 1 square mile area known as University Circle. University Circle Inc., a nonprofit group promoting businesses and cultural institutions, spends $2.5 million a year on its own police force patrolling the area, according to its financial statement.
Cleveland’s hospital zone may be one of the most heavily policed areas in the country. Besides the private police agencies, the city police patrol the area, as does the Greater Cleveland Regional Authority Transit Police Department. City police handle most of the major crimes in the area. Calls for help made from the hospital area through the 911 system still go to city police, although there are times when the city department will contact the private agencies for help. Still, the hospital police forces initiate most of their own arrests and citations, often prompted by a traffic stop, a call from hospital staff or someone acting suspicious.
In 2001, Ronnie Dunn, a professor of urban studies at Cleveland State, conducted a traffic census during morning and evening rush hours of drivers on Chester Avenue, a busy thoroughfare that runs parallel to Euclid and along the northern border of the clinic main campus. It also cuts through a small section of University Circle.
Dunn determined that 60.5% of drivers were white and 37.2% were Black. In addition, using a radar gun, he found that whites drove faster than Blacks. In an interview, Dunn said that he believes the percentage of white drivers along Chester is even higher today, in part because of the clinic’s expansion. Moreover, census data shows that a relatively large proportion of families in the Black neighborhoods around the medical area don’t have a car. In East Cleveland, which borders the hospital zone and is 91% Black, 40% of households don’t have a vehicle, the highest proportion of any Ohio city.
Yet the Cleveland Clinic and University Circle police departments ticket Black drivers on Chester far more often than whites. Of the 59 people cited by clinic police since Jan. 1, 2015, in which Chester was listed as either the primary or secondary street, 41, or 69%, were issued to Black drivers. Of the 112 citations in the same area by University Circle police, 97, or 87%, were to Black drivers. University Hospitals police don’t patrol the neighboring streets.
ProPublica also analyzed traffic tickets by the home ZIP code of the driver. For each of the 10 most-cited ZIP codes, the proportion of Black people among the population was lower than the percentage of Black drivers who were given traffic citations by University Circle police. The same was true for eight of the top 10 most-cited ZIP codes issued to drivers by Cleveland Clinic police.
Citations issued to drivers who live outside the Euclid Avenue area also underscore the inequities. For example, 94% of citations issued by University Circle police to residents of a ZIP code in suburban Garfield Heights went to Black drivers. Yet only 38% of people in that ZIP code are Black; 56% are white. Similarly, University Circle police issued citations to 32 drivers from one ZIP code in Euclid, a city northeast of the hospital area. All of those cited but one were Black drivers, even though the population in the Euclid ZIP code is 54% Black. Overall, Black people made up 1,723, or 88%, of the 1,965 drivers cited by University Circle police since 2015.
Repicky, the University Circle chief, said that there have been several incidents of cars hitting pedestrians. “We are trying to be proactive to slow people down so someone doesn’t get hit,” he said.
The most common traffic citation issued by University Circle police is for driving with a suspended or revoked license. Only 26 of the 813 charged with that offense were white; 774, or 95%, were Black.
The clinic issued driving while suspended citations to 286 people during the same time, with 266, or 93%, of those going to Black drivers. The offense carries a maximum sentence of 180 days in jail.
“This is a strong indication of racially targeting black motorists for heightened scrutiny, i.e. racial profiling,” Dunn wrote in an email about the driving while suspended numbers. “Even if there were other offenses, to the point that one population accounted for almost 100% defies the laws of random probability. It is statistically improbable that blacks which arguably represent let’s say anywhere from 38-50% of motorists would account for 95% of those driving under suspension or without a valid license without specifically being targeted for additional scrutiny.”
In Ohio, driver’s licenses are suspended and revoked for a variety of reasons — including failure to pay a traffic ticket, dropping out of school or not paying child support — and studies have shown the poor are disproportionately affected. The Ohio Bureau of Motor Vehicles says 1.1 million residents had their license suspended in 2018. It doesn’t keep statistics on suspensions by race.
On Aug. 8, 2019, Rachael Ramos was looking forward to attending a Cleveland Browns exhibition game that night with her boyfriend. But she never made it to the game.
A single mother with two school-age daughters, Ramos worked as a customer service representative at an insurance company, but that didn’t cover all the bills. So, whenever she could spare the time, she delivered food as a driver for DoorDash. On this day, needing money for a car payment, she dropped off a meal at the VA Medical Center in University Circle and started to head back to the west side of Cleveland, where she lives and typically makes most of her deliveries.
At a stoplight at the corner of Carnegie Avenue and East 89th Street, Ramos turned right on a red light as allowed, she said. Both roadways are city streets within the area the clinic police are allowed to patrol. Nearly two blocks later, on the fringe of the clinic campus, Ramos saw police lights in her rearview mirror and pulled over.
It was a clinic officer, Brad Kushan. Ramos immediately called her boyfriend so that he could listen to her interactions with Kushan. “I was getting pulled over and I didn’t know for what,” she said. “I was sweating. My heart was beating like crazy.”
Kushan, she said, told her she failed to use her turn signal when she turned right onto Carnegie. Ramos didn’t believe him. She said she is obsessive about using her blinker and is annoyed when other drivers don’t do the same. The officer, on a citation issued to Ramos, wrote “red traffic signal disobeyed.”
Kushan asked for her license. When he returned, he told Ramos he was arresting her. There was a warrant, he said, stemming from a four-year-old speeding ticket she failed to pay and a hearing on the matter that she missed.
He handcuffed Ramos and told her to stand next to the cruiser as drivers on busy Carnegie, which connects the East Side to downtown, slowed to watch. “I was so embarrassed,” Ramos said. “This was impossible to believe.” After about 10 minutes, a female clinic police officer arrived on a bike and patted her down.
Ramos had received speeding tickets in the past, but traffic citations were the extent of her dealings with the justice system. Her last speeding ticket led to the four-year-old warrant. After that, she had made a conscious decision to drive slower.
Ramos, who is Black, said she suspects she was profiled by the clinic police and that they may have run her plates before stopping her. Kushan cited 244 drivers between 2015 and the beginning of August this year. Six in 10 were issued to Black drivers. Overall, half of the clinic’s traffic citations were to Black drivers, according to court data. The clinic said that traffic stops by its officers “must be based on reasonable suspicion” that an offense has occurred.
The clinic provided its own data for three years of traffic stops. In each year, Black people who were stopped were disproportionately more likely to get a traffic citation instead of a warning. In 2017, Black people comprised 42% of those stopped but 61% of those ticketed. The comparable percentages in 2018 were 35% of traffic stops and 39% of citations; and, in 2019, 45% and 47%.
When arresting her, Ramos said, Kushan told her that, “They want you brought in on the warrant.” The clinic said that an officer in such a situation has no discretion. If there is a valid warrant and the issuing agency will take custody of the person, by law the police must make an arrest, it said.
Kushan did not respond to requests for comment.
Still handcuffed, Ramos was placed in the back of a clinic cruiser and taken downtown to the Justice Center, a hulking, block-long concrete complex of courts, the city police headquarters and the county jail. She was booked just after 4 p.m. Someone in the intake area told her she would be out in minutes, likely released on personal recognizance. Four hours later, a woman approached Ramos and asked why she was there. The woman looked up Ramos in the computer system, but there was no record of her there, Ramos said. Her boyfriend, meanwhile, was calling the jail to find out what was happening with her. He was getting nowhere.
Ramos was moved to a cell with a dozen other women. She was taken out briefly to be photographed and fingerprinted. A few hours later, she was told to put on a light brown, prison issue uniform. A nurse drew blood from her arm to test for tuberculosis. Guards then put Ramos in a cell by herself, where she cried. At 2:44 a.m., without explanation, Ramos was released on personal recognizance. “They opened the door, said, ‘Get your shit and go,’” Ramos said.
The experience “was terrifying,” Ramos said. “I was really, really affected by it.”
Thirteen days later, Ramos was back at the Justice Center downtown for a court date related to the new charges from the clinic and the outstanding speeding ticket. A video recording shows it lasted less than five minutes. The tape shows Ramos talking to the city prosecutor. Ramos said she told him about spending the night in jail and that he looked shocked to hear that.
After talking to Ramos, the prosecutor approached the municipal court judge and said, “The city will nolle,” which is short for “nolle prosequi,” or “unwilling to pursue.” The judge informed Ramos this meant all of the charges against her, including those stemming from the 2015 speeding ticket, were being dropped. She thanked him and then asked, “Cleared?” “You are cleared,” the judge responded. “You did not do it.” Ramos thanked him again and said, “No, I did not,” as she left the courtroom.
Although the cases were dropped, the matter turned out to be financially burdensome to Ramos. Her car was ordered towed by clinic police, costing more than $200, she said. And Ramos couldn’t make her car payment. She had to borrow for both and ended up paying more than twice the initial loan in interest.
“I told my friends and family what happened and there was disbelief,” Ramos said. “People were like, the clinic arrested you?”
More than seven years before he cited Jackson, Williams and Bates, Parks was among a group of six clinic officers who conducted what a federal court called “a violent, traumatic invasion” of a Black traffic violator’s home.
In January 2011, 38-year-old Aaron Hayward was driving home at 4 a.m. through the clinic area after working the night shift at his family’s store. A clinic officer, Richard Howard, said in his report that the green Jeep Cherokee driven by Hayward was speeding and making illegally wide turns. Howard followed him to the home that Hayward shared with his elderly parents on 106th Street abutting the clinic campus. Some of what followed was recorded by a camera connected to a taser gun.
Within minutes, five other clinic officers, including Parks, arrived at the end of the Haywards’ driveway. According to Howard’s report, Hayward refused orders to stop when he walked from his car and into his home. Howard and Parks banged on the door. Hayward’s then-85-year-old father, Essex, who was in his pajamas, asked what they wanted. “Open the (expletive) door,” the officers repeatedly shouted, according to the Haywards. Essex Hayward refused. He and his wife, Annie, said that the officers never identified themselves and that they thought someone was trying to break into their home. Annie, who was then 78, called 911 during the incident to summon help from Cleveland city police.
The clinic police said Aaron Hayward stood behind his father, taunting them and shouting expletives. One clinic officer pulled out his police-issued shotgun and approached the home with the weapon in “the low ready” according to his report. Parks, in his own report, said he told Aaron Hayward “if he did not come out we were going to break the glass to come in.” With that, Howard took out his steel baton and smashed the glass pane on the door. As Parks reached through the broken glass, Aaron Hayward punched him and chipped his two front teeth, Parks said in his report. The officers eventually got the door open, but there was a second wooden door with a small, square glass window. As the officers rammed the door, Aaron Hayward used his body to brace the door and block them.
Essex Hayward repeatedly yelled at the officers that the family had called the Cleveland police in an unsuccessful effort to get them to back off.
One officer took the butt of his shotgun and broke a small window on the second door, showering plexiglass on the Haywards. Another officer then pushed his taser through the small opening and fired at Aaron Hayward, eventually hitting him in the chest. As Aaron pulled the Taser probes out of his chest, Parks fired another taser at Hayward through the same opening. Essex Hayward said he thought the first taser was a gun and the police were going to shoot his son.
The family said they were terrified. “I am in my house,” Aaron Hayward shouted at the officers. “I’ve done nothing.” At one point, after the last door was broken through, an officer threatened to jail Hayward’s elderly parents and demanded they show him identification. “You don’t need my damn ID,” Annie Hayward told him.
Clinic police dragged Hayward out of the house to the driveway. Outside, Parks used his taser to “drive stun” Hayward, a painful tactic in which the taser is pressed directly against the skin. Hayward was drive-stunned twice in the abdomen and once in the thigh. The officers also allegedly beat Hayward with batons, kicked him, knelt on his head to pin it against the driveway and used racial slurs, according to the family’s subsequent lawsuit.
Aaron Hayward was charged with felonious assault, three counts of assault, aggravated menacing, failure to comply with a police order, three counts of resisting arrest, criminal damaging and obstructing official business. Facing significant jail time if convicted, he made a deal with prosecutors and pleaded guilty to one charge of failing to comply and one count of resisting arrest, both misdemeanors. All other charges were dropped. He was fined $200 and was not given any jail time.
In court filings, the clinic cited the guilty plea as evidence that Aaron Hayward was lawfully arrested and that his constitutional rights were not violated. The hospital denied that any actions by its officers were racially motivated or involved excessive force, violence or illegal entry.
Although the clinic publicly defended the officers, behind the scenes it found that they violated several policies, according to disciplinary records produced during the litigation. Howard was cited internally for violating policies regarding vehicle pursuits; failing to control his temper; and failing to report an event accurately. He was given a “final written warning.” Parks was faulted for shooting the taser through the door. He received “documented counseling” and was ordered to take remedial training. No one was suspended or fired.
Howard, who has left the clinic police and now works as a truck driver, said that he and the other officers followed procedure, and that race played no role. “Everything we did was in reaction to what he [Aaron Hayward] was doing,” Howard said. He added that officers were initially unsure whether Hayward actually lived at the 106th Street address.
The Hayward family sued. Dunn, the Cleveland State professor, served as an expert witness, interviewed the Haywards and prepared a report on the family’s behalf. A federal district judge in Cleveland dismissed the lawsuit in 2012, citing Hayward’s guilty plea. Two years later, a federal appeals court in Cincinnati upheld the dismissal of Aaron Hayward’s claims. But it ruled that claims by Annie and Essex Hayward that the clinic officers illegally entered their home and inflicted emotional distress should not have been dismissed.
“This was a violent, traumatic invasion, effected through an alarming and unnecessary show of force,” the court found, adding that the Haywards made a plausible claim that the clinic police action “was so extreme and outrageous as to go beyond all possible bounds of decency and as such that it can be considered as utterly intolerable in a civilized community.”
Two months later the clinic agreed to settle the case. Details of that settlement remain secret.
The Haywards left the clinic neighborhood in 2015 after the hospital bought their home for $55,000. The house was demolished and is now a clinic parking area.
Armed private police patrolling Cleveland's medical zone and the city streets around it disproportionately charge and cite Black people, even though most hospital employees, patients and visitors are white.
This article was published on Monday, September 28, 2020 in ProPublica.
A few minutes after noon on a September day in 2018, Jacarvi Jackson and Darcell Williams were crossing Euclid Avenue, a main road through Cleveland's medical area. Both of them worked for a vendor that supplies food to patients at the world-renowned Cleveland Clinic. Still in their work uniforms after finishing their eight-hour shifts at the hospital's loading dock, they were heading to a Burger King lot where their cars were parked. They were in a hurry — Jackson was worried about getting to his classes at Cleveland State University — and didn't take the crosswalk.
A police cruiser was coming toward them. Eric Parks, the officer inside, rolled down his window and shouted at Jackson and Williams to use the crosswalk. When they didn't, Parks pulled up and drove onto the sidewalk curb to block their path, they said. Parks then jumped out of the cruiser, grabbed Jackson, bent his arm behind his back and pinned him against the vehicle. Parks held him there for several minutes as two more officers responded to the scene.
In a police report, Parks said that the pair initially refused to provide identification, and that he held Jackson against the cruiser because "I felt he might strike me." Parks and a second officer, Steven Jevnikar, wrote that Jackson and Williams cursed repeatedly, complaining that the only reason they had been stopped was because they were Black.
Parks also said Jackson had begun to flee, which Jackson and Williams denied. Jackson said he had no reason to run away. He was steps from his car, his clinic identification badge was draped around his neck and he was carrying a backpack filled with textbooks. According to Jackson, Parks told the other officers, "They usually run." It was clear, Jackson said, that the comment referred to Black people.
Jevnikar apparently mocked Jackson's distress. When Jackson, his lip quivering, was "staring me down," Jevnikar wrote in his report, "I asked him if he was having a stroke."
Parks cited Williams and Jackson for jaywalking. "I was scared as hell," Williams said. "It was traumatizing."
Bruised and in pain, Jackson immediately went to the clinic emergency room, missing his class. "I felt violated," he said. "These people are supposed to be protecting me."
Even though this incident took place on a public street and sidewalk, the officers who confronted Jackson and Williams were not Cleveland police. Instead, they were part of Cleveland Clinic's private force, which is granted policing powers by the city.
These hospital cops don't just handle disturbances in hospital corridors or emergency rooms. In look and practice almost indistinguishable from Cleveland police, the clinic's 153 officers are armed, make arrests and stop motorists on city streets, including major commuter routes. Along with smaller private police departments operated by University Hospitals and the nonprofit University Circle economic development group, they patrol the city's medical zone, an island of prosperity and promise that cuts through one of the poorest sections of Cleveland.
On Tuesday evening, Cleveland Clinic and University Circle police will help provide security for the first presidential debate, which will be held on the clinic's main campus. At the same time, the three private police forces illustrate a little-known dimension of a pervasive problem that has drawn national attention this year and is likely to come up in the debates: racial inequities in law enforcement. As if posting a "Keep Out" sign, private police in Cleveland's largely white and affluent hospital zone disproportionately cite and criminally charge Black people, often for traffic violations or misdemeanors such as trespassing, jaywalking and possession of marijuana. Some Black people who are charged or cited, like Jackson and Williams, work at the clinic; others are simply passing through the area.
Look-Alike Police Forces
Racial disparities in enforcement of low-level offenses are characteristic of police departments nationwide, said Lynda Garcia, director of the policing campaign at The Leadership Conference on Civil and Human Rights in Washington. Trespassing and marijuana possession "are not violent crimes and they are generally used to harass folks," she said. "In more affluent areas, they give officers the grounds to stop people, arrest them and keep them away from these areas. For all those reasons, they are problematic. There is no real pressing public safety issue."
The tens of thousands of people who work in the hospital corridor along Euclid, are treated as patients there or drive its streets are predominantly white. Yet most of those cited and charged by the private police agencies along Euclid Avenue and surrounding roads are Black, according to court data obtained by ProPublica.
Since Jan. 1, 2015, private police officers operating in the area on Euclid that begins at the sprawling clinic main campus and stretches to the University Hospitals complex have brought more than 8,000 criminal charges and traffic citations against 5,600 people in Cleveland Municipal Court. Nearly three-fourths of those arrested or ticketed are Black, well above the percentage of Black people among the area's workers and visitors.
The proportions were even higher for the two criminal charges most commonly filed by the private police. Since 2015, the three private forces have issued criminal charges of trespassing to 466 people. Nearly 9 in 10 of those — 405 in all — were against Black people. Similarly, Black people comprised more than 90% of the 242 people charged with misdemeanor possession of less than 100 grams of marijuana.
Overall, nearly 90% of the people charged by two of the private forces — University Hospitals and University Circle — are Black. The Cleveland Clinic's disparity was less extreme but still significant. Almost 7 out of 10 individuals charged by the clinic were Black.
Private Cops Charge Black People More Often Than All Others
Since Jan. 1, 2015, Cleveland Clinic, University Hospitals and University Circle police have disproportionately charged or cited Black people, especially for trespassing, possession of marijuana and driving with a suspended license.
As part of their agreements with the city of Cleveland, the three private police departments in 2018 were required to set up civilian boards to review complaints. They were supposed to do so within 30 days, but the clinic said it established a review board this past May; University Hospitals and University Circle said they are in the process of doing so.
In written responses to ProPublica's findings, the clinic said that it reviews data annually "to ensure there are no concerns for biased policing." It did not say whether those reviews have indicated any concerns. Statistics that it supplied to ProPublica show that almost two-thirds of the people it arrested in 2018 and 2019 were Black. Of the 275 people arrested in 2018, 65.1% were African American and 27.6% were Caucasian. Arrests soared to 425 in 2019; 64.7% of those arrested were African American and 28.2% were Caucasian.
The clinic said that it issues most of its criminal trespass citations outside traditional business hours, and most individuals found to be on its campus without a "legitimate business purpose" come from the local area. "As a result, the racial composition of those citations will generally reflect the racial composition of the City's neighborhoods," it said. Its police issue a verbal and written warning to first-time trespassers, and then can cite or charge them if they trespass for a second time within six months, it said.
Clinic police participate in "robust community outreach initiatives that include working with community partners and local schools to educate residents and students on crime prevention and security awareness," it said. The clinic seeks to recruit a diverse group of officers that reflects the community, and its officers undergo training in diversity, inclusion and unconscious bias, the clinic's response said.
University Hospitals said in a statement that its forthcoming civilian review committee will "enhance oversight" of its police department and "reflect our commitment to equitable treatment, social justice and safety." The committee will be "fully empowered" to "examine individual incidents and practices in the department," the hospital said.
The hospital also said that its officers "do incredible work" and are trained in diversity and de-escalating situations. It said that its police have issued citations to 260 people since the beginning of 2018 — an average of three individuals cited per officer per year. "We very carefully examine situations when citations are issued and take steps to fully address any concerns," the hospital said. Unlike the other private police departments, University Hospitals did not comply with ProPublica's request for disciplinary records. A spokesman said that University Hospitals was "leaning toward the side of caution" to protect patients' privacy.
Chief James Repicky of the University Circle police said that the nonprofit's lawyer is reviewing a proposal to establish a review board. He said that his officers don't target Black people, and that traffic in the area largely flows from predominantly Black communities. "The city of Cleveland is probably 60% Black and we are next to East Cleveland, which is 90% Black," he said. "It is what it is. We are not looking at color but basically trying to slow people down."
Cleveland's population is 50% Black and East Cleveland's, 91%, according to census data. The ZIP code that includes the clinic, University Hospitals and University Circle is racially diverse, 42% Black and 41% white. Neighboring ZIP codes are as much as 93% Black. The picture changes when the employees, patients and visitors who saturate the area every day are included. University Hospitals said patients at its Cleveland center reflect the demographics of the northeast Ohio market, which is about 75% white. In addition, 62% of the 8,500 employees there are white.
The Cleveland Clinic would only provide patient and employee demographics for its entire system, which includes other locations in northeast Ohio as well as hospitals in Florida and Nevada. The system's patients in 2019 were 77% white and 15% Black. Its employees break down similarly with 73% white and 16% Black.
Some nearby residents support the extra policing provided by the private departments. "It's a force multiplier with a lot of deterrence," said City Councilor Blaine Griffin, who represents the area.
Since George Floyd's death in Minneapolis brought the issue of racist policing to the forefront, protests and investigations have focused on public departments. Left largely unexamined has been the universe of private police at hospitals, universities, amusement parks and other venues. In a 2017 national survey by Campus Safety magazine, 1 in 4 hospitals reported its public safety staff was "sworn police officers." Across the country, these private police receive little public oversight or scrutiny even though they carry weapons and often operate with full police powers — usually granted to them by the state or city they operate in.
In Ohio, there are currently more than 1,000 police officers certified by the state at about two dozen hospitals. The nonprofit OhioHealth system, including Grant Medical Center in Columbus, has more than 140 special police officers, according to the Ohio secretary of state. Although Grant doesn't have the memo of understanding with the city that is required to meet the legal definition of a police force, and its officers don't have the power to make arrests, they are certified by the state and attend Ohio's police academy.
In 2017, two hospital officers and a security guard at Grant Medical Center were suspended after a video surfaced of a Black man being hit with a baton, pepper-sprayed and forced to the ground during a confrontation outside the facility. Hospital police alleged that the man, who was visiting a family member working at the hospital, swung at security personnel when asked to leave the premises. Based on their statements, Columbus police charged him with disorderly conduct. The charge was dismissed.
A witness who recorded the video told The Columbus Dispatch that the police used excessive force. The hospital president said at the time that, while the officers followed protocol, they had an opportunity to "exercise more compassion, coupled with good judgment," and that "we deeply regret what happened." Afterwards, OhioHealth provided training in unconscious bias and de-escalation techniques, spokesman Mark Hopkins said.
The Cleveland Clinic employs more police officers than all but six cities in Ohio and is the third-largest police agency in Cuyahoga County, with more officers than the Cleveland suburb of Parma, which has 78,000 residents and covers 20 square miles. In addition to the main campus and adjoining streets, clinic officers also patrol other hospitals and properties it operates in northeast Ohio. University Hospitals' police force has 29 officers and a K-9 unit. University Circle has 21 full-time officers.
Hospital police officers in Cleveland undergo similar training to city police. They must complete the state police training academy program before applying for three-year appointments with the secretary of state. Applicants are generally required to have high school degrees and meet certain physical fitness standards.
The clinic police created a traffic enforcement unit after a speeding driver with a suspended license ran a red light on the clinic campus and killed a patient in June 2018. In connection with the new initiative, Parks issued 14 jaywalking citations between Aug. 27 and Sept. 24, 2018. All but three of the people he cited, including Jackson and Williams, were Black.
Almost 30% of the clinic's officers are Black, according to its data. Craig Kirkwood, who is Black, was the third clinic officer who responded to the jaywalking incident involving Jackson and Williams. When Kirkwood arrived at the scene, he said, the situation was spiraling out of control. He tried to defuse tensions and support Parks. He told Jackson and Williams that he understood why they were upset, but if they wanted to complain, they should follow up with a supervisor. If they kept arguing on the street, they would lose.
Still, Kirkwood said, he objected to the way Parks dealt with Black suspects. "To me, he is biased," he said. "He doesn't have respect for the people in the community he is in. He goes and does what he wants."
Parks did not respond to requests for comment. Of 65 individuals he has charged or cited since Jan. 1, 2015, 31, or 48%, were Black.
Jevnikar, the other officer at the scene, declined to comment. "I was advised by my superiors that I cannot speak with you," he said.
Kirkwood was fired last year by the clinic after five years on the force for three instances in which he allegedly violated department policy, including a physical altercation with a suspect outside a clinic building. Kirkwood, who denies any wrongdoing, filed a federal lawsuit alleging he was treated differently because of his race. The lawsuit was dismissed. The clinic said Kirkwood used excessive force against three African Americans within a short period of time and was "appropriately terminated."
Williams and Jackson filed written complaints with the clinic's police department about how they were treated. The clinic said that it couldn't find the complaints, but that they were investigated by a police commander, who determined that there was no wrongdoing by the officers and that the jaywalking citations were appropriate.
One of the other jaywalkers cited by Parks in 2018 was Vernetta Bates, a health coordinator at the clinic. In an interview, she said she was crossing a quiet side street when Parks, who had just corralled another Black jaywalker on the same cut-through, motioned to Bates to come over to them. He was "really, really nasty and mean to us," she said. As Parks wrote out their tickets, Bates said, some white clinic employees, several in doctor's coats, jaywalked without penalty. (Parks cited four jaywalkers that day, one of whom was white.) Bates, who said she had never received a ticket before, paid a $162 fine.
Just as the Black Lives Matter movement has highlighted racial inequities in law enforcement, so the lopsided toll of Black victims in the pandemic has revealed them in healthcare. Hospital policing is where these two disparities collide. Cleveland's prestigious hospitals, which mainly employ and treat whites, are surrounded by low-income Black neighborhoods with some of the worst health outcomes in Ohio, including lower life expectancy and high rates of asthma, diabetes and infant mortality.
Hospitals have replaced the factories and plants of a faded industrial era as the most important economic engine in northeast Ohio. The clinic surpassed Walmart last year to become Ohio's largest employer, with more than 50,000 employees. It is consistently ranked as one of the top three hospital systems in the country in both quality of care and size.
Revenues for the clinic system, which also includes hospitals in two other states and three countries, were just over $10 billion in 2019. The presidential debate will take place in the Samson Pavilion, which features a massive steel roof and soaring 80-foot-high indoor courtyard. It's the centerpiece of a half-billion-dollar health education campus that opened last year.
In many other cities, University Hospitals would be the biggest healthcare system. As it is, the UH system is the second-largest employer in northeast Ohio. Its 2018 revenues topped $4 billion. The hospitals are separated on Euclid by the campus of Case Western Reserve University, which has its own police force.
University Hospitals said it has formed a Social Justice & Equity Team across the institution to "address the issue of racism and its effects on our patients, caregivers and the community we serve."
Both University Hospitals and Case Western are located within the 1 square mile area known as University Circle. University Circle Inc., a nonprofit group promoting businesses and cultural institutions, spends $2.5 million a year on its own police force patrolling the area, according to its financial statement.
Cleveland's hospital zone may be one of the most heavily policed areas in the country. Besides the private police agencies, the city police patrol the area, as does the Greater Cleveland Regional Authority Transit Police Department. City police handle most of the major crimes in the area. Calls for help made from the hospital area through the 911 system still go to city police, although there are times when the city department will contact the private agencies for help. Still, the hospital police forces initiate most of their own arrests and citations, often prompted by a traffic stop, a call from hospital staff or someone acting suspicious.
In 2001, Ronnie Dunn, a professor of urban studies at Cleveland State, conducted a traffic census during morning and evening rush hours of drivers on Chester Avenue, a busy thoroughfare that runs parallel to Euclid and along the northern border of the clinic main campus. It also cuts through a small section of University Circle.
Dunn determined that 60.5% of drivers were white and 37.2% were Black. In addition, using a radar gun, he found that whites drove faster than Blacks. In an interview, Dunn said that he believes the percentage of white drivers along Chester is even higher today, in part because of the clinic's expansion. Moreover, census data shows that a relatively large proportion of families in the Black neighborhoods around the medical area don't have a car. In East Cleveland, which borders the hospital zone and is 91% Black, 40% of households don't have a vehicle, the highest proportion of any Ohio city.
Yet the Cleveland Clinic and University Circle police departments ticket Black drivers on Chester far more often than whites. Of the 59 people cited by clinic police since Jan. 1, 2015, in which Chester was listed as either the primary or secondary street, 41, or 69%, were issued to Black drivers. Of the 112 citations in the same area by University Circle police, 97, or 87%, were to Black drivers. University Hospitals police don't patrol the neighboring streets.
ProPublica also analyzed traffic tickets by the home ZIP code of the driver. For each of the 10 most-cited ZIP codes, the proportion of Black people among the population was lower than the percentage of Black drivers who were given traffic citations by University Circle police. The same was true for eight of the top 10 most-cited ZIP codes issued to drivers by Cleveland Clinic police.
Citations issued to drivers who live outside the Euclid Avenue area also underscore the inequities. For example, 94% of citations issued by University Circle police to residents of a ZIP code in suburban Garfield Heights went to Black drivers. Yet only 38% of people in that ZIP code are Black; 56% are white. Similarly, University Circle police issued citations to 32 drivers from one ZIP code in Euclid, a city northeast of the hospital area. All of those cited but one were Black drivers, even though the population in the Euclid ZIP code is 54% Black. Overall, Black people made up 1,723, or 88%, of the 1,965 drivers cited by University Circle police since 2015.
University Circle Police Mostly Cite Black Drivers, Even From a Majority White ZIP Code
A ProPublica analysis revealed most of the ticketed drivers from the 44125 ZIP code in suburban Garfield Heights were Black.
Repicky, the University Circle chief, said that there have been several incidents of cars hitting pedestrians. "We are trying to be proactive to slow people down so someone doesn't get hit," he said.
The most common traffic citation issued by University Circle police is for driving with a suspended or revoked license. Only 26 of the 813 charged with that offense were white; 774, or 95%, were Black.
The clinic issued driving while suspended citations to 286 people during the same time, with 266, or 93%, of those going to Black drivers. The offense carries a maximum sentence of 180 days in jail.
"This is a strong indication of racially targeting black motorists for heightened scrutiny, i.e. racial profiling," Dunn wrote in an email about the driving while suspended numbers. "Even if there were other offenses, to the point that one population accounted for almost 100% defies the laws of random probability. It is statistically improbable that blacks which arguably represent let's say anywhere from 38-50% of motorists would account for 95% of those driving under suspension or without a valid license without specifically being targeted for additional scrutiny."
In Ohio, driver's licenses are suspended and revoked for a variety of reasons — including failure to pay a traffic ticket, dropping out of school or not paying child support — and studies have shown the poor are disproportionately affected. The Ohio Bureau of Motor Vehicles says 1.1 million residents had their license suspended in 2018. It doesn't keep statistics on suspensions by race.
On Aug. 8, 2019, Rachael Ramos was looking forward to attending a Cleveland Browns exhibition game that night with her boyfriend. But she never made it to the game.
A single mother with two school-age daughters, Ramos worked as a customer service representative at an insurance company, but that didn't cover all the bills. So, whenever she could spare the time, she delivered food as a driver for DoorDash. On this day, needing money for a car payment, she dropped off a meal at the VA Medical Center in University Circle and started to head back to the west side of Cleveland, where she lives and typically makes most of her deliveries.
At a stoplight at the corner of Carnegie Avenue and East 89th Street, Ramos turned right on a red light as allowed, she said. Both roadways are city streets within the area the clinic police are allowed to patrol. Nearly two blocks later, on the fringe of the clinic campus, Ramos saw police lights in her rearview mirror and pulled over.
It was a clinic officer, Brad Kushan. Ramos immediately called her boyfriend so that he could listen to her interactions with Kushan. "I was getting pulled over and I didn't know for what," she said. "I was sweating. My heart was beating like crazy."
Kushan, she said, told her she failed to use her turn signal when she turned right onto Carnegie. Ramos didn't believe him. She said she is obsessive about using her blinker and is annoyed when other drivers don't do the same. The officer, on a citation issued to Ramos, wrote "red traffic signal disobeyed."
Kushan asked for her license. When he returned, he told Ramos he was arresting her. There was a warrant, he said, stemming from a four-year-old speeding ticket she failed to pay and a hearing on the matter that she missed.
He handcuffed Ramos and told her to stand next to the cruiser as drivers on busy Carnegie, which connects the East Side to downtown, slowed to watch. "I was so embarrassed," Ramos said. "This was impossible to believe." After about 10 minutes, a female clinic police officer arrived on a bike and patted her down.
Ramos had received speeding tickets in the past, but traffic citations were the extent of her dealings with the justice system. Her last speeding ticket led to the four-year-old warrant. After that, she had made a conscious decision to drive slower.
Ramos, who is Black, said she suspects she was profiled by the clinic police and that they may have run her plates before stopping her. Kushan cited 244 drivers between 2015 and the beginning of August this year. Six in 10 were issued to Black drivers. Overall, half of the clinic's traffic citations were to Black drivers, according to court data. The clinic said that traffic stops by its officers "must be based on reasonable suspicion" that an offense has occurred.
The clinic provided its own data for three years of traffic stops. In each year, Black people who were stopped were disproportionately more likely to get a traffic citation instead of a warning. In 2017, Black people comprised 42% of those stopped but 61% of those ticketed. The comparable percentages in 2018 were 35% of traffic stops and 39% of citations; and, in 2019, 45% and 47%.
When arresting her, Ramos said, Kushan told her that, "They want you brought in on the warrant." The clinic said that an officer in such a situation has no discretion. If there is a valid warrant and the issuing agency will take custody of the person, by law the police must make an arrest, it said.
Kushan did not respond to requests for comment.
Still handcuffed, Ramos was placed in the back of a clinic cruiser and taken downtown to the Justice Center, a hulking, block-long concrete complex of courts, the city police headquarters and the county jail. She was booked just after 4 p.m. Someone in the intake area told her she would be out in minutes, likely released on personal recognizance. Four hours later, a woman approached Ramos and asked why she was there. The woman looked up Ramos in the computer system, but there was no record of her there, Ramos said. Her boyfriend, meanwhile, was calling the jail to find out what was happening with her. He was getting nowhere.
Ramos was moved to a cell with a dozen other women. She was taken out briefly to be photographed and fingerprinted. A few hours later, she was told to put on a light brown, prison issue uniform. A nurse drew blood from her arm to test for tuberculosis. Guards then put Ramos in a cell by herself, where she cried. At 2:44 a.m., without explanation, Ramos was released on personal recognizance. "They opened the door, said, 'Get your shit and go,'" Ramos said.
The experience "was terrifying," Ramos said. "I was really, really affected by it."
Thirteen days later, Ramos was back at the Justice Center downtown for a court date related to the new charges from the clinic and the outstanding speeding ticket. A video recording shows it lasted less than five minutes. The tape shows Ramos talking to the city prosecutor. Ramos said she told him about spending the night in jail and that he looked shocked to hear that.
After talking to Ramos, the prosecutor approached the municipal court judge and said, "The city will nolle," which is short for "nolle prosequi," or "unwilling to pursue." The judge informed Ramos this meant all of the charges against her, including those stemming from the 2015 speeding ticket, were being dropped. She thanked him and then asked, "Cleared?" "You are cleared," the judge responded. "You did not do it." Ramos thanked him again and said, "No, I did not," as she left the courtroom.
Although the cases were dropped, the matter turned out to be financially burdensome to Ramos. Her car was ordered towed by clinic police, costing more than $200, she said. And Ramos couldn't make her car payment. She had to borrow for both and ended up paying more than twice the initial loan in interest.
"I told my friends and family what happened and there was disbelief," Ramos said. "People were like, the clinic arrested you?"
More than seven years before he cited Jackson, Williams and Bates, Parks was among a group of six clinic officers who conducted what a federal court called "a violent, traumatic invasion" of a Black traffic violator's home.
In January 2011, 38-year-old Aaron Hayward was driving home at 4 a.m. through the clinic area after working the night shift at his family's store. A clinic officer, Richard Howard, said in his report that the green Jeep Cherokee driven by Hayward was speeding and making illegally wide turns. Howard followed him to the home that Hayward shared with his elderly parents on 106th Street abutting the clinic campus. Some of what followed was recorded by a camera connected to a taser gun.
Within minutes, five other clinic officers, including Parks, arrived at the end of the Haywards' driveway. According to Howard's report, Hayward refused orders to stop when he walked from his car and into his home. Howard and Parks banged on the door. Hayward's then-85-year-old father, Essex, who was in his pajamas, asked what they wanted. "Open the (expletive) door," the officers repeatedly shouted, according to the Haywards. Essex Hayward refused. He and his wife, Annie, said that the officers never identified themselves and that they thought someone was trying to break into their home. Annie, who was then 78, called 911 during the incident to summon help from Cleveland city police.
The clinic police said Aaron Hayward stood behind his father, taunting them and shouting expletives. One clinic officer pulled out his police-issued shotgun and approached the home with the weapon in "the low ready" according to his report. Parks, in his own report, said he told Aaron Hayward "if he did not come out we were going to break the glass to come in." With that, Howard took out his steel baton and smashed the glass pane on the door. As Parks reached through the broken glass, Aaron Hayward punched him and chipped his two front teeth, Parks said in his report. The officers eventually got the door open, but there was a second wooden door with a small, square glass window. As the officers rammed the door, Aaron Hayward used his body to brace the door and block them.
Essex Hayward repeatedly yelled at the officers that the family had called the Cleveland police in an unsuccessful effort to get them to back off.
One officer took the butt of his shotgun and broke a small window on the second door, showering plexiglass on the Haywards. Another officer then pushed his taser through the small opening and fired at Aaron Hayward, eventually hitting him in the chest. As Aaron pulled the Taser probes out of his chest, Parks fired another taser at Hayward through the same opening. Essex Hayward said he thought the first taser was a gun and the police were going to shoot his son.
The family said they were terrified. "I am in my house," Aaron Hayward shouted at the officers. "I've done nothing." At one point, after the last door was broken through, an officer threatened to jail Hayward's elderly parents and demanded they show him identification. "You don't need my damn ID," Annie Hayward told him.
Clinic police dragged Hayward out of the house to the driveway. Outside, Parks used his taser to "drive stun" Hayward, a painful tactic in which the taser is pressed directly against the skin. Hayward was drive-stunned twice in the abdomen and once in the thigh. The officers also allegedly beat Hayward with batons, kicked him, knelt on his head to pin it against the driveway and used racial slurs, according to the family's subsequent lawsuit.
Aaron Hayward was charged with felonious assault, three counts of assault, aggravated menacing, failure to comply with a police order, three counts of resisting arrest, criminal damaging and obstructing official business. Facing significant jail time if convicted, he made a deal with prosecutors and pleaded guilty to one charge of failing to comply and one count of resisting arrest, both misdemeanors. All other charges were dropped. He was fined $200 and was not given any jail time.
In court filings, the clinic cited the guilty plea as evidence that Aaron Hayward was lawfully arrested and that his constitutional rights were not violated. The hospital denied that any actions by its officers were racially motivated or involved excessive force, violence or illegal entry.
Although the clinic publicly defended the officers, behind the scenes it found that they violated several policies, according to disciplinary records produced during the litigation. Howard was cited internally for violating policies regarding vehicle pursuits; failing to control his temper; and failing to report an event accurately. He was given a "final written warning." Parks was faulted for shooting the taser through the door. He received "documented counseling" and was ordered to take remedial training. No one was suspended or fired.
Howard, who has left the clinic police and now works as a truck driver, said that he and the other officers followed procedure, and that race played no role. "Everything we did was in reaction to what he [Aaron Hayward] was doing," Howard said. He added that officers were initially unsure whether Hayward actually lived at the 106th Street address.
Aaron Hayward at the emergency room after Cleveland Clinic officers forced their way into his home. This photo was included as an exhibit in the family's lawsuit.
The Hayward family sued. Dunn, the Cleveland State professor, served as an expert witness, interviewed the Haywards and prepared a report on the family's behalf. A federal district judge in Cleveland dismissed the lawsuit in 2012, citing Hayward's guilty plea. Two years later, a federal appeals court in Cincinnati upheld the dismissal of Aaron Hayward's claims. But it ruled that claims by Annie and Essex Hayward that the clinic officers illegally entered their home and inflicted emotional distress should not have been dismissed.
"This was a violent, traumatic invasion, effected through an alarming and unnecessary show of force," the court found, adding that the Haywards made a plausible claim that the clinic police action "was so extreme and outrageous as to go beyond all possible bounds of decency and as such that it can be considered as utterly intolerable in a civilized community."
Two months later the clinic agreed to settle the case. Details of that settlement remain secret.
The Haywards left the clinic neighborhood in 2015 after the hospital bought their home for $55,000. The house was demolished and is now a clinic parking area.
Agnel Philip contributed reporting.David Armstrong is a senior reporter at ProPublica specializing in healthcare investigations. david.armstrong@propublica.org
In the early days of the coronavirus pandemic when testing supplies were limited, local politicians went to great lengths to help a businessman with a criminal past try to sell telehealth and COVID-19 services across Texas. This is their story.
This article was published on Friday, September 25, 2020 in ProPublica.
The video had the feel of a public service announcement, as the two elected leaders sat around a table in Austin and discussed the importance of COVID-19 testing.
It was late March, and these men were among those tasked with organizing the response to the emerging coronavirus pandemic: Ruben Becerra, the chief executive of fast-growing Hays County, just south of Austin; and Tommy Calvert, a county commissioner representing a chunk of San Antonio, about 70 miles to the south. Also present was Becerra’s chief of staff, Alex Villalobos.
The man hovering around the officials, holding a small needle in his gloved hands, was a convicted felon turned serial entrepreneur named Kyle Hayungs. Hayungs, 37, was seeking telemedicine contracts across the state. He had no official government role, but he did have access to thousands of COVID-19 antibody tests through a company he hoped to make his partner.
“This company ... is really going to help the government,” said Calvert, after Hayungs pricked the Bexar County commissioner’s finger and squeezed a drop of his blood into a test kit.
“There’s no reason we can’t roll this out to protect our people,” pronounced Becerra, the Hays County judge. “Wonderful.”
The recording ends with Hayungs urging viewers to visit two websites: one for the company selling the tests and another for a new entity he’d founded with an official-sounding name but that only a select few had heard of, CovidTaskForce.org. Meanwhile, the two masked elected officials stare into the camera.
The video, which Calvert subsequently deleted after it was uploaded onto YouTube and was obtained by ProPublica and The Texas Tribune, was perhaps the first public example of how local leaders took steps to promote Hayungs, his business interests and the antibody tests, whose accuracy has since been called into question.
Later that week, Calvert would send a memo to the court urging his fellow county commissioners to buy 10,000 of the antibody tests. Becerra would try to convince mayors in his county to buy them by the thousands.
These were the early days of the coronavirus crisis, when elected and medical officials alike were scrambling to understand how best to contain the virus and the availability of tests was limited. At the time, it wasn’t uncommon for companies to pitch their services and supplies to government officials. Companies like Hayungs’ that offered telehealth services in particular made spectacular revenue gains through the first months of the pandemic.
But what is far more unusual was for public officials to become part of the marketing effort.
A ProPublica/Tribune investigation, which included dozens of interviews and a review of hundreds of emails, audio recordings and social media posts, found the officials did not disclose to either the public or their fellow elected officials the extent of their relationships with Hayungs. The leaders worked, sometimes vigorously, to persuade their local governments to buy COVID-19 tests from a company Hayungs was hoping to partner with.
Becerra and Villalobos helped Hayungs with his proposal to advise Hays County on its coronavirus response. Villalobos edited company marketing material. And even before the onset of COVID-19, Becerra assisted Hayungs with a federal grant application and brokered a pitch meeting with the leader of a prominent local hospital.
Calvert, meanwhile, did not disclose that he once held an unpaid position on the advisory board of Hayungs’ company, MRG Medical. The pair had what Hayungs said was at least a five-year association that, according to Facebook posts, included dinners and time together at the Kentucky Derby.
The ProPublica/Tribune investigation also found a trail of misleading or false claims made by Hayungs, his employee and business associates, as well as a marketing effort that included a document apparently produced by Becerra that claimed to give an emergency use authorization to use the tests, something only the U.S. Food and Drug Administration can do.
The pandemic provided Hayungs an opportunity to achieve a goal he’d been working toward for more than a year: persuading local governments like Hays County to contract with MRG Medical for virtual care management.
The testing initiative he was promoting gave some officials pause. These entities “suddenly came into the world, and it’s the best thing since sliced bread,” said one elected official in Hays County, who — like many interviewed for this story — asked not to be identified because he feared retribution from Becerra. “We decided this was not anything we were going to invest in. It didn’t sound right, didn’t smell right, didn’t look right.”
Since early August Becerra, a Democrat, has not responded to multiple requests for an interview, written questions sent to him on three occasions or a detailed breakdown of this story’s findings. In a statement sent through a spokesman just prior to publication, Becerra said Hayungs “has turned out to be a serial exaggerator and self promoter.”
“He has never had any deal with Hays County and doesn’t represent, speak for or have the confidence of myself or the court,” he wrote. “It seems unlikely the court would ever vote to approve any contract with him.”
“I would never support non-medically credentialed AND non FDA cleared testing for our Hays County Residents,” he added. “That is grossly irresponsible and I will not be characterized as supporting any kind of effort in that capacity.”
In a written response to ProPublica and the Tribune, Calvert, a Democrat, said through an attorney that there was no conflict of interest and that he was not required by law to disclose his previous unpaid position on the MRG Medical advisory board, which he said he resigned from in December 2018. He noted that he “paid for his own trip to the Kentucky Derby ... with Mr. Hayungs.”
The attorney, Pete Thompson, wrote, “At no time did Commissioner Calvert take any actions that were unethical or illegal,” adding that the commissioner “has continuously fought for better access to testing.” Thompson added that Calvert “specifically requested that the county conduct due diligence on any company considered for the testing.”
The commissioner said the video he participated in with Becerra and Hayungs was “purely educational,” adding his aim has been to secure more testing for the region. Calvert, through his attorney, emphasized that Hayungs was “in negotiation” with the company selling the COVID-19 tests and not an actual owner. “He simply assisted Commissioner Calvert because the commissioner didn’t know anything about the product or how to use it until that day,” the lawyer said.
Calvert took down the video because he did not want to appear to be officially endorsing the services and because he “observed political opponents” making an issue of it.
Calvert hasn’t fulfilled open records requests from ProPublica and the Tribune for any communication with Hayungs, citing a Texas attorney general notice that allows for the suspension of the state public information act in the wake of the COVID-19 pandemic.
Villalobos, the Hays County chief of staff, said in a statement that Republicans were blocking access to COVID-19 tests. “This was and remains a public health emergency,” he said, “and I was happy to work with any vendor who could get more of our citizens the tests they needed.”
In an interview with ProPublica and the Tribune, Hayungs said he has no personal relationship with Becerra or Calvert.
“We’re doing nothing but good. I’m open to showing my financial records and everything,” he told a reporter. But when later asked to share those records, Hayungs responded in writing, “What is the point of showing you ... my financial records?”
Among the most vocal about their concerns was Becerra’s fellow commissioner on the Hays County court, Republican Walt Smith. Smith and Becerra had squared off in the past, with Smith asking the Texas Rangers last year to investigate the judge’s decision to remove an item from a court meeting agenda without the commissioners’ approval. The Rangers are the investigative arm of the state’s Department of Public Safety.
Smith had been skeptical about Becerra’s support for Hayungs since the entrepreneur had first pitched his telemedicine company to county commissioners in the summer of 2019. When he saw Hayungs was involved with the testing effort, Smith grew suspicious because of his own experience in that field: In the early 2000s, Smith worked for the chair of the U.S. House subcommittee that, in part, oversaw funding for the FDA.
“I firmly believe this is not about testing,” said Smith, who went so far as to seek copies of Becerra’s correspondence. “This is about a company who saw an opportunity to build their telemedicine business.”
The ensuing battle over the tests would consume the county’s attention at a critical time in its COVID-19 response, said another local official. By June, Hays County would become a national hot spot for coronavirus cases.
“It seemed like everyone at the county felt so burned out after” the debate over buying the kits, the official said.
Ethics experts say the failure to disclose past relationships and even the appearance of trying to steer government dollars to a specific company raises ethical and perhaps legal questions.
“There is an expectation that a government official will behave in a way that is neutral in respect to different private businesses,” said Donald Kettl, a public policy professor at the University of Texas at Austin.
“(Lack of transparency) always raises questions about why, what else is going on?” Kettl said. “Even the suspicion that something might be going on undermines the public trust.”
In his interview, and in written answers to questions, Hayungs said he believes Smith sabotaged the testing deal partly because of the commissioner’s current work as a consultant, accusing Smith of working on behalf of clients “doing testing” and of “protecting the clinics in Hays County who provide testing for a fee.” ProPublica and the Tribune could find no evidence that Smith has any current clients with a clear medical interest.
More broadly, Hayungs, Villalobos and Calvert have all argued that Smith, or Republicans in Hays County like him, are part of a broader effort they say is fueled by President Donald Trump and conservative politicians to restrict access to testing — something Smith has vehemently denied.
For his part, Hayungs said his efforts were all about business.
“It’s all networking, it’s all building relationships,” Hayungs said. “That’s what people have to do to build companies. That’s all I’m doing. There’s no bad here. Next question.”
The Origin
A December 2018 political fundraiser for Becerra on the 55th floor of an Austin luxury condo brought the two ambitious men together. A month earlier, Becerra, a businessman, had been elected Hays County judge, the first-ever Latino to hold the position there. Hayungs was a fast-talking, up-and-coming entrepreneur, who constantly worked to get into rooms with people “of (a) different caliber ... in a different league,” he said during a June 2018 podcast interview, interactions he regularly posted on social media.
Becerra told Hayungs that night that he wanted to revamp the indigent health care program for Hays County residents who don’t have insurance and don’t qualify for Medicare or Medicaid. “I literally got goosebumps,” Hayungs said in the interview with ProPublica and the Tribune. His company, MRG Medical, aimed to lower health care costs through the use of telemedicine. “I almost started crying.”
The men shared common ground. Both left the Rio Grande Valley on the Texas-Mexico border in search of something bigger. Becerra and his wife, Monica, moved to San Marcos, the Hays County seat, in 2000 and bought Gil’s Broiler, the city’s oldest restaurant. He twice ran for local office and lost. He joined civic boards connected to the Latino community, including one with Villalobos, his future chief of staff, who was a law enforcement officer at Texas State University.
Hayungs took a more circuitous route. In a 2019 podcast interview, Hayungs said he “went to county jail” 17 times when he was young, the result of what he called “youthful indiscretions.” He moved to Austin for school but was arrested again in February 2008. He eventually pleaded guilty to charges of money laundering and conspiracy to distribute less than 50 kilograms of marijuana. Hayungs said in a podcast interview that he spent 18 months in a medium-security prison, finishing his bachelor’s in business administration while behind bars.
He got out in 2010 and got into merchant services and credit card processing. He launched an ATM business. Within a few years, Hayungs was a guest on podcasts seemingly aimed at other would-be entrepreneurs, shows with names like “Cashflow Ninja” and “Beta2Boss.” He talked about his connections, his earnings and the ways he’d learned to generate passive income, money that comes with minimal time invested. He framed his career as an example of overcoming the adversity of his incarceration. “Started from the bottom and now I’m here!” he told another podcast host.
Since high school, Hayungs said he also had a vision of getting into the health field and started to turn his attention to that industry. In a 2017 podcast interview, he said he was starting to focus “on something in the health care space.”
That same year, Becerra launched his third campaign for public office, as a Democrat running for Hays County judge in what would be a bruising race, with news reports detailing the Becerras’ history of financial troubles, including tens of thousands of dollars in state and federal tax liens. Becerra won, despite the controversy and his opponent’s considerable war chest.
Less than a month after first meeting Hayungs, Becerra was sworn into office on Jan. 2. At his side was his new chief of staff, Villalobos, who by then was a councilman in the Hays County city of Kyle. Smith, 45, also won a seat on the commissioners court in 2018, in his first run for office, joining Becerra. In Texas, a commissioners court handles a county’s general business, much like a city council for a municipality. Each county elects a presiding officer, known as a county judge, and four commissioners.
A week later, the judge met with Hayungs in his office, according to the judge’s calendar, obtained through an open records request.
“Maki’n MOVES in Hays County!” Hayungs wrote that day in a Facebook post, including a photo with Becerra. “Approved to Re-Vamp / Re-Brand Hays County Indigent Healthcare Program.”
The county commissioners had not approved him to do anything.
Emails over the next several months show how Becerra and Villalobos continued to help the entrepreneur. Becerra assisted him with what Hayungs said in an email was a $9.6 million federal grant application for rural health that he said would benefit Hays County. When Hayungs asked for help applying for the grant, he supplied Becerra and Villalobos with a prewritten letter of recommendation. Becerra sent it back, copied and pasted onto county letterhead. When Hayungs sent a list of county officials he wanted to meet with, Villalobos tried to help set up the conversations.
“Sorry for delayed response,” Villalobos wrote Hayungs on Feb. 6, 2019. “I am working on getting the group that you advised we needed. The scheduling part is taking some time. I am confident we can get everyone in on the same day. I will keep you updated.”
In an emailed response to questions from ProPublica and the Tribune, Villalobos said “it is typical that vendors who desire to work with the county will request the county judge and/or commissioners to meet with them in preliminary phase of introduction.”
No Hays County policies specifically prohibit a department head or elected official from communicating with potential vendors, though “statutory regulations regarding conflict could come into play,” said Vickie G. Dorsett, Hays’ first assistant county auditor.
Becerra even made a direct case for Hayungs’ telehealth services to Anthony Stahl, the president and CEO of what was then called the Central Texas Medical Center. Hays County has a contract with the hospital to provide the county’s indigent care.
“Had lunch with CEO of hospital today,” Becerra wrote in a March 21, 2019, email, whose recipients included Hayungs, Villalobos and Calvert, the Bexar County commissioner. “He’s excited. We need to schedule a meeting with all parties to be effected for maximum buy in.”
Stahl describes his reaction differently.
“I would not characterize it as excited at all,” said Stahl, now president of Adventist HealthCare White Oak Medical Center in Maryland. No one in the county’s indigent health care program was looking to revamp the system or to invest in telehealth at the time, he said.
But Stahl wanted to be a good partner and agreed to a meeting. When hospital officials asked if they could visit one of the sites where MRG’s technology was already in use, Stahl said he can’t recall ever hearing back from the company about a location.
Hayungs finally got his chance to pitch the Hays County commissioners at a public meeting on June 25, 2019. He said his company’s services, which included remote patient monitoring, could ultimately reduce the county’s indigent care costs. Commissioners and a county health employee expressed confusion about what exactly Hayungs wanted to sell them or how it would benefit the county.
“It was just very odd,” said Smith, who did not attend the meeting but later watched the video. The item was labeled as part of a workshop on virtual care, but Hayungs’ company was the only presenter. He also cited contracts and connections with the University of Houston and the Texas Organization of Rural & Community Hospitals, known as TORCH. ProPublica and the Tribune contacted the organizations, who said no such contracts exist, though he met with officials at both.
“We’re just looking for an opportunity to put Hays County on a national map and use it as a model to do this across the country,” Hayungs said in commissioners court that day, adding, “I want to start at the county level, then we come out on the news and then every primary care in the area is going to be calling us.”
MRG’s technology was “light years ahead of everybody that’s in the market,” he told commissioners.
During the meeting, a Hays County Health Department official expressed concern about Hayungs’ plan, deeming it impractical for the population the office serves. Hayungs kept telling county officials that Medicare and Medicaid would pay for the service, but indigent care clients aren’t covered by either. Most of her clients needed help filling out forms or couldn’t read, she said. Some were likely to pawn a fancy device like the medical grade watch MRG offered.
Hayungs’ dream for a deal went nowhere. That didn’t end Becerra and Hayungs’ relationship.
In September, Hayungs posted a photo on Facebook of himself at dinner in Austin with Becerra and his wife, as well as Villalobos and Calvert. Both Becerra and Villalobos would attend a meeting with Hayungs at the University of Texas at Austin’s Dell Medical School, another instance in which the entrepreneur afterward claimed a partnership on Facebook. Dell said in a statement it has never had a business relationship with MRG.
Hayungs would also take to Facebook to express support for Villalobos’ bid for county sheriff in the November 2020 election. Hayungs said that he provided Villalobos “a roadmap to use as a strategy” for his campaign, adding: “I did the work pro bono and have not contributed in any other way to (Villalobos) or his campaign.”
Villalobos said the help consisted of Hayungs’ “hot take on social media while we were waiting for a meeting to start.”
Hayungs was always selling. In October, he was spotted with Becerra during a county government conference in Galveston, where two county commissioners from Calhoun County, interviewed by ProPublica and the Tribune, said they briefly spoke to Hayungs. Hayungs was a “typical salesman,” recalled Calhoun County Commissioner Vern Lyssy. “I can’t remember exactly what his sales pitch was, but he could get people these watches and these watches would determine if you’re going to be sick or not and it would save a bunch.” Lyssy’s wife kept kicking him under the table, he said, trying to get him to stop the conversation.
Both Lyssy and his fellow county commissioner, David Hall, separately recall Hayungs talking about keeping any potential contracts under $50,000, so they wouldn’t have to go out for bid.
Hayungs said he and Becerra ran into each other at the event, which vendors regularly attend. He said his focus was to ensure deals can “move quick” without officials having to “write big checks.” (In Hays County, contracts below $50,000 do not have to go out for competitive bidding.)
To the two Calhoun County commissioners, the behavior was striking. “That’s a red flag,” Lyssy said.
Hall agreed. “Once I heard that, it was like, dude, you’re going to end up in prison.”
The COVID-19 Opportunity
Toward the end of March, Hoppy Haden, the chief executive of rural Caldwell County, southeast of Hays, received an emailpitching COVID-19-related telehealth services. Like many Texas elected officials at the time, Haden was receiving a deluge of offers from medical and supply companies, selling masks, gloves, tests and health care solutions.
He deleted most without a second thought. However, this email, from a company called MRG Medical, caught his eye. “We are the FEMA designated Covid response team for Hays County,” the email claimed, “and will soon likely also be for Harris, Bexar, Uvalde, Williamson and Travis Counties.”
The email sounded official, but something felt off. Haden forwarded it to his regional Homeland Security director, who in turn sent it to a contact of his at Hays County.
“Are these guys legit?”
“Yes, they are,” responded Villalobos, the Hays County chief of staff.
The email was part of Hayungs’ latest venture, an effort to sell telehealth services to Hays and other counties, but this time using the COVID-19 pandemic to do so.
In reality, Hayungs and MRG Medical had no official role with Hays County or with any of the other counties mentioned. FEMA has told ProPublica and the Tribune this characterization is “misleading and inaccurate.”
But on multiple occasions, Hayungs and his associates would invoke the county and Becerra’s names to try and win COVID-19-related contracts across the state.
By March, Hayungs had developed relationships with two companies based in the Austin-area: AnyPlace MD, which provides care to the military and in places like prisons and nursing homes, and Reliant Immune Diagnostics, led by a Berkeley and Columbia-educated doctor named Henry Legere.
Before the pandemic, Legere had developed a mobile app called MD Box to help people track their symptoms for ailments like strep throat and urinary tract infections and access diagnostic tests. With the arrival of the novel coronavirus, MD Box added COVID-19 testing to its portfolio, acquiring a large quantity of antibody tests manufactured by a company in Guangzhou, China, called Wondfo Biotech.
At the time, much confusion surrounded antibody tests, and the Wondfo tests would prove particularly problematic. Unlike molecular and antigen diagnostic tests, the FDA warned that blood-based antibody tests were not intended to diagnose an active infection but rather reveal if someone previously had the virus. Nearly all antibody tests existed in a confusing gray zone of regulation.
At the beginning of the pandemic, the FDA took the unprecedented step of allowing companies like Legere’s to distribute antibody tests that were not authorized by the agency. Wondfo was one such test that the FDA hadn’t yet vetted but that vendors could sell.
Becerra announced his intention to buy 2,000 of the tests. The cost was $39,000, according to an invoice obtained by ProPublica and the Tribune. He did so without input from key Hays County medical leaders or approval from his fellow commissioners, as county rules require.
Emails obtained through the Texas Public Information Act show that Becerra and Villalobos also had been conferring with MRG about the company’s proposal to advise the county on its COVID-19 response and conduct a health assessment to measure the county’s “preparedness.” The proposal called on the county to “activate private sector supporters.” Villalobos went so far as to edit the proposal, emails show.
Villalobos said in a written response to questions that any edits he made to any documents were minor and done at the direction of “a court member.”
Becerra pushed the narrative that antibody tests were preferable to diagnostic swab tests, which his office said in an April 6 press release “often provokes an involuntary coughing/sneezing/spitting episode from the patient and places those providers at great risk of contracting the virus themselves.”
The county judge appears to have issued what is called an emergency use authorization, or EUA, for the antibody tests, according to pitch materials sent to Harris County Public Health and the city of San Marcos. An EUA signals the FDA has actually vetted a test to some extent. However, the FDA has never issued such an authorization for the Wondfo tests and told ProPublica and the Tribune that a county judge cannot do so.
Hays County General Counsel Mark Kennedy concurred. “I have found no evidence in the law that says a county judge in Texas can issue an EUA,” Kennedy said.
Becerra has not answered questions about the authorization letters, which bears his signature and appear on his letterhead.
The marketing effort was rife with other claims about nonexistent partnerships with other entities and confusing messaging around the tests, which required residents to sign up with MD Box’s telehealth app to access the tests. Some local officials worried that would effectively turn test-seekers into clients of the company and subject them to a range of fees. According to the MD Box website, a telemedicine visit costs $49.95.
Marketing materials also claimed the tests could be taken at home and purchased online at H-E-B, a popular Texas grocery store chain. Neither claim was true.
On March 30, MRG Medical sent out a press release announcing the formation of something called the “COVID Task Force Initiative” that would bring 50,000 test kits to Hays County and praising Becerra for “lifting the FDA ban to release the test.”
“I didn’t realize I was a pioneer,” Becerra said at the press conference announcing the partnership. “It will be very easy for me to share with (officials in other counties) the clear concise road maps they would need to follow for them to emulate what we’re doing in Hays County.”
The announcement blindsided other county officials and staff.
“I will not be a party to sending out this advertisement posing as an FAQ for something not approved by the Commissioners Court or the General Counsel’s Office,” wrote then Hays County communications manager Laureen Chernow in an email to the county’s Health Department. “I just gave it a quick read and have no medical training but I am horrified by the process, the cost, and the skeezy FDA ‘approval’ disclaimer, among other things.”
Becerra would apologize for not notifying staff and fellow commissioners about the potential deal, but he said he didn’t want to announce the deal before it was finalized.
Even one of the public relations officials working on the testing effort with MRG raised concerns about the use of the COVID Task Force as a name because it could be confused with the national COVID-19 task force led in part by a federal health official with Texas roots. “I’m not sure why there would be a conflict of interest,” Hayungs responded to the PR person’s email. “The way I look at it is that gentleman will probably be adopting our solutions very soon.”
Villalobos, in his written response to ProPublica and the Tribune, said Hayungs is clearly “an aggressive salesman and may have gotten over his skis in some of his communications outside Hays County, none of which I approved.”
Smith, the Hays County commissioner, said he became suspicious of the claim of in-home testing and the nebulous boasts of FDA clearance. He sought clarification from H-E-B, which confirmed it had once explored a pilot program to sell other MD Box tests but denied it had a deal to sell the COVID-19 tests.
“We had companies that were operating, telling people they were an arm of our county government,” Smith said in an interview. “And no one in our county government knew them except for two individuals,” referring to Becerra and Villalobos.
At a contentious commissioners court meeting on March 31, Smith and Becerra traded claims of criminality. Becerra said Smith’s meddling compromised the deal. Smith accused Becerra of playing games with the health of Hays County residents.
The court did not vote on Becerra’s proposed purchase of 2,000 tests, but Becerra did not stop trying to sell them to other local leaders.
The Sales Pitch
On April 2, Becerra invited Legere, whose company Reliant Immune Diagnostics had developed the MD Box app, to a conference call with local EMS medical directors and for more than an hour tried to convince them to give their stamp of approval to the MD Box testing proposal, according to a recording of the call obtained by ProPublica. Legere emphasized he was not endorsing one test over another. “We’re a medical solution and not a testing solution,” he told them. “We use all the tests and tools available to us as any doctor would in the hospital.”
But the medical officials stood firm. “I’m concerned that the general public may take a negative result (of an antibody test) and say: ‘I don’t have COVID everything’s great. I can go out into the grocery stores or whatnot,’” Kate Remick, medical director for the San Marcos EMS, told Legere and Becerra, according to the recording.
Steven Moore, medical director of the Wimberley EMS, was blunt: “You’ve got three medical directors that don’t support this.”
Becerra continued to question their objections. “I’m sorry if I would disagree with an MD,” he said. “I don’t know what kind of MDs you are ... but I’m having a hard time understanding why this is a problem to test more people.”
Hayungs said in an interview that the officials should have jumped at the opportunity.
“We were one of the first companies in the U.S. to get these tests,” Hayungs said. “OK, there’s some risk and liability, but during the pandemic when it’s a crisis and people are dying, like who cares, if they take the test and it doesn’t work it’s better than not doing anything especially when they really don’t cost anything and the government will pay for them.”
On separate conference calls with mayors and other elected leaders in Hays County, Becerra urged his fellow leaders to buy thousands of the tests and claimed they were more than 90% accurate. In fact, at least one study showed the Wondfo tests were only about 55% accurate when performed as a finger pinprick blood test.
Becerra also gave them shifting, often conflicting, information regarding the FDA emergency use authorization, which the tests still lacked despite the judge’s apparent homemade order.
When the mayor of San Marcos asked if the test had an emergency use authorization, Becerra responded: “Yes, I think they already have that. That’s exactly what allows them to do what they are doing.”
Though Hays County emergency medical directors had said they opposed purchasing the tests, Becerra continued to tell other leaders they had “an interest” in the testing.
Even as he told local leaders that he didn’t specifically endorse MD Box, telling them he wasn’t trying to pick “winners and losers,” he emphasized on a later call he thought its tests were a “great tool.”
“We as the government can buy this test for our vulnerable population,” he said, adding: “We can make that decision. We are all on the phone right here.”
Local officials and emergency responders began doing their own research into MD Box and the Wondfo tests.
Bill Foulds Jr., the mayor of the Hays County city of Dripping Springs, said his city was concerned about the lack of clear costs associated with the telehealth aspect of the test and accompanying app, as well as the tests’ effectiveness. “We never felt these tests offered quality results or had a success rate and dependability that we would feel confident that we were going to stop the spread of COVID-19,” he said in an interview.
Legere said recently, in written responses to questions, that his company eventually discontinued the use of these particular tests “when we internally tested other tests that we found performed better.”
Becerra would push again for the companies’ testing services the next week, on April 14, when he invited company representatives into commissioners court to make a final pitch.
By this time, relations between Hayungs and his associates had begun to deteriorate, a state of affairs Hayungs blames on Smith, who he claims cost him a $1 million deal between MRG Medical and MD Box by raising questions.
At an April 14 commissioners court meeting, the CEO from AnyPlace MD, Shane Stevens, said multiple times that he was not involved with MRG. Legere, the founder of MD Box, would later say in an interview with ProPublica and the Tribune that Hayungs wanted a job with his company and wanted it to purchase MRG.
Hayungs “was moving very fast,” Legere said. “I don’t do business that way.”
At the same meeting, Becerra conceded that the MD Box and MRG Medical marketing efforts were “overreaching” and “ambitious.” Despite that, he told AnyPlace MD and Reliant Immune Diagnostics representatives: “I think it’s wholesome, and I think it’s wonderful.”
Commissioners took no action on the companies’ pitch. In an April 18 email to fellow Commissioner Debbie Gonzales Ingalsbe, Becerra said he believed the opposition to the antibody testing was “politically motivated.”
“I truly expected the commissioners to help arm me with the tools needed to keep our community safe, I never expected them to be complicit deniers,” he wrote.
By the end of April, any potential testing deal with the companies that Becerra had pushed for was dead.
Aftermath
In the aftermath of Becerra’s failed efforts, Hays County would eventually partner with the Texas Division of Emergency Management to set up mobile testing sites throughout the county. AnyPlace MD — without MRG’s involvement — would secure a contract with the city of Austin to run one of its testing locations. COVID-19 infections would surge across the state, including in Hays County. The months dragged on.
Then, in the summer, Hayungs popped up again. His company, MRG Medical, landed on the Aug. 11 commissioners court agenda for the county’s annual budget workshop, typically an opportunity for department heads to make their cases for funding. Private companies were an unusual addition, but Hayungs got a spot to again try to sell his virtual health care platform to Hays County more than a year after he’d originally pitched it.
Before the meeting, Hayungs told a ProPublica/Tribune reporter he was thinking about filing a lawsuit against Smith for ruining his chance to sell his company to MD Box. Maybe he’d sue the rest of the commissioners court, too, he said.
Hayungs created his own meeting agenda and emailed it to all the commissioners. The items listed included discussing “BAD PRESS” and “Takeaways and NEXT steps to move FORWARD to do what’s RIGHT for HAYS County and its Citizens, NOT for other interests or agendas.”
He came with a similar pitch as the one he’d made the previous year, but instead of launching into his presentation, Hayungs tried to turn the meeting into a prosecution of Smith.
Smith was ready, too. He’d gathered every important email and document he’d collected over the previous months.
What unfolded was the culmination of more than a year of frustration, suspicion and recrimination.
Hayungs played videos of his company’s COVID-19 test kit press conference, showing Becerra extolling the virtues of the tests. He played a heavily edited video of the April 14 commissioners court meeting, trying to show Smith undermining the testing efforts.
“Mr. Smith,” said Hayungs, as the video played, “you might want to pay attention over here.”
Smith countered by producing his own video, as well as emails and documents that highlighted the many questionable claims Hayungs and his associates had made over the previous months.
The back-and-forth grilling took up most of Hayungs’ presentation time.
Finally, Becerra stepped in, urging Hayungs to get on with his presentation, but never acknowledging all he’d done to help the businessman.
Hayungs again expressed frustration that the county had yet to jump at his offer.
“I was trying to put Hays County on the map a year ago,” he declared, echoing the same words he’d said to commissioners the previous summer.
Even after the explosive exchange, Becerra remained ready to help Hayungs advance his goals. He suggested a meeting between his Health Department director and Hayungs.
“Maybe you could schedule a time to meet or meet now?” Becerra said. “Whatever works. … You seem to be offering something that’s highly wonderful. Let’s see if we can make it a fit.”
Ronnie Rollins used a controversial loophole to secure $300 million in bonus payments for his nonprofit nursing home chain. A federal investigation called the payments "inappropriate," and Georgia is caught in a multimillion dollar dispute.
This article was published on Tuesday, September 22, 2020 in ProPublica.
By Max Blau for Georgia Health News
Nearly 20 years ago, Ronnie Rollins walked out of a hotel in Macon, Georgia, with an idea that he believed might lead the state's struggling rural nursing homes to financial salvation.
State health officials had just told a conference filled with industry players about a federal program that would dramatically increase payments for care provided to nursing home residents. But there was a catch: To obtain the bonus money, the nursing home had to be owned by a public agency affiliated with a hospital.
Rollins owned a chain of nursing homes and didn't seem to qualify for the program. But he dreamed up a workaround. His company had partnered with development authorities, which are designed to attract new businesses and jobs to counties, to secure tax-exempt bonds for its nursing homes. Rollins believed he could convince development authority officials to use their agencies to apply for those bonus payments from Medicaid. The idea hinged on convincing the federal government that the owners of the nursing homes were those agencies. Not his chain.
It was an unorthodox idea, he knew, one that pushed the limits of the law, and so Rollins asked Georgia's Department of Community Health for an opinion. After a "healthy debate," according to one former top official, DCH approved Rollins' plan — so long as the department received a cut of the bonus payments. Department officials hoped to use the money to help stabilize Medicaid reimbursement rates for providers across the state.
For Rollins, the idea paid off. Over nearly two decades, Rollins quietly built one of Georgia's largest healthcare empires with the help of approximately $300 million in bonus payments under the federal program. In its 2002 fiscal year, his companies collected $20 million in total revenue. In its 2017 fiscal year, the companies in his nonprofit network, today called Community Health Services of Georgia, or CHSGa, recorded over $650 million in total revenue. Rollins' network includes a company called Ethica, which includes 55 nursing homes, and related firms that supply the facilities with prescription drugs, healthcare supplies and medical transportation.
Rollins today is many things to many people. A hardworking businessman determined to improve nursing home care. A pickup-driving deacon in his hometown. A well-connected political donor whose investment company and corporate executives over the past decade donated more than $1 million to Georgia's top Republican officials. One of the smartest men in the state when it came to taking advantage of the arcane policies of Medicaid and Medicare.
But, to the federal government, Rollins is the architect of a scheme that threatens Georgia's ability to collect Medicaid funds.
"If you're going to change things," Rollins explained, "someone has to push the boundaries."
Georgians may pay the price for his success, according to an investigation by Georgia Health News and ProPublica. The investigation is based on an analysis of state and federal health data, interviews with nearly two dozen people, government records, court filings and state agency emails obtained under Georgia's open records act.
The Centers for Medicare and Medicaid Services, the federal agency responsible for America's major public healthcare programs, ruled in 2014 that a portion of the bonus payments that flowed to Rollins' chain were "inappropriate." Payments under the program have halted, and CMS is now seeking $76 million in repayment from the state for the allegedly improper reimbursements.
Georgia's Medicaid agency has appealed the decision, locking the state in an ongoing battle against the federal agency. If the appeal fails, taxpayers will be responsible for paying back the money, not Rollins.
The dispute has also reverberated beyond Rollins' case to impact Georgians. Three top healthcare insiders contacted by GHN and ProPublica said that it has hampered the pursuit of innovative new proposals and delayed a Georgia-style Medicaid waiver, all of which could have secured millions of dollars for patient care services.
DCH officials declined requests for interviews, citing the ongoing dispute. In a letter from 2015, one top DCH official called the CMS findings "factually and legally incorrect." A U.S. Department of Health and Human Services appeals board has not made a final decision.
Since CMS closed the loophole six years ago, Rollins' Ethica nursing home network has been slapped with more than $1.2 million in fines for violating standards designed to keep patients safe. Some of those facilities have reported below-average staffing levels. From 2013 to 2018, the network recorded more than twice the number of deficiencies per nursing home than the average facility in Georgia.
The problems have continued during the pandemic: The COVID-19 death rate for the company's 55 homes is 4.9%, compared with the statewide nursing home death rate of 3.3%, according to a data analysis of COVID-19 deaths and bed capacity conducted by GHN and ProPublica. At the Dawson Health and Rehabilitation Center, for instance, 14 of the 50 or so residents died from COVID-19 this past spring. Over half of Rollins' 55 nursing homes have experienced coronavirus outbreaks, each of them with more than 30 residents testing positive.
In a series of interviews, Rollins said his nursing homes provided high-quality care. He pointed to awards given by industry associations, as well as internal data that showed Ethica had fewer deficiencies per survey than the national average since 2018. Ethica's staff remains devoted to the fight against COVID-19 to keep patients safe during an unprecedented pandemic, he said. He declined to specifically address questions about the death rate in his homes.
Rollins defended his use of the CMS loophole, which he believed was legal and even approved of by federal officials, who had previously audited the program. While older nursing homes have at times lagged in patient outcomes, Rollins said his new and remodeled facilities have excelled. The loss of bonus federal payments, as he sees it, prevented Ethica from completing a systemwide overhaul improving senior care across Georgia.
Rollins' idea, he said, offered a blueprint that would have finally given rural Georgia's seniors the nursing homes they deserved. But the federal government stood in the way of those plans.
"We could've transformed long-term care," Rollins said. "But we lost the ability to fulfill our mission."
A Search for Money
In the mid-1990s, Rollins realized that his for-profit nursing home chain, Care More, was headed toward financial doom. He had spent over a decade studying the ins and outs of Medicare, which primarily covered therapy, medications and other healthcare services in skilled-nursing facilities for the elderly. Rollins' nursing homes, however, served rural Southerners who often qualified only for Medicaid, which had lower reimbursements than Medicare. After recession and war strained America's economy in the '90s, states froze their Medicaid reimbursement rates. His bank cut off Care More's line of credit. He was running out of options. "I couldn't make the numbers work," he said.
America's long-term care industry is largely propped up by government funding. For most of the country's history, there was no healthcare system for elderly people facing chronic medical conditions. As average life expectancy increased over 50% during the early 20th century, so did demand for senior care services. The closure of poorhouses shifted that burden onto hospitals. So the hospital industry lobbied for a new kind of health system for older adults who were dependent on getting medical help but did not need acute care. The passage of Medicaid and Medicare in 1965 to provide care for the indigent and elderly led to the birth of the modern nursing home industry. It wasn't long after that business started booming.
Congress intended for Medicaid's costs to be split between federal and state governments. But in the 1980s, the Reagan administration slashed Medicaid. Suddenly stripped of federal money, cash-strapped states experimented with unconventional ways to obtain more money. That often involved looking for loopholes in the law. Daniel Hatcher, author of "The Poverty Industry: The Exploitation of America's Most Vulnerable Citizens," said states' attempts to exploit such loopholes can undermine the broader intent of the nation's massive public health insurance program.
It's "a fundamental flaw of Medicaid," Hatcher said.
At the hotel conference in Macon in 2001, Rollins listened to new money-raising ideas being promoted by the administration of then-Gov. Roy Barnes, a Democrat, who sought to increase healthcare services available to Georgians. Rollins received a packet of information explaining that state officials planned to raise the necessary funds through a "revenue maximization" campaign that would ensure that "all federal reimbursement programs ... are utilized to the fullest extent possible." One of the strategies that caught Rollins' eye was known as the "Upper Payment Limit" program, or UPL, which effectively allowed government-owned nursing homes to receive matching federal bonus payments that closed the gap between Medicaid and Medicare reimbursement rates.
The UPL process is complex: A nursing home owned by a government agency wires funds to Georgia's Medicaid agency; Georgia sends money to CMS; CMS returns the payment, along with a bonus amount, to Georgia; Georgia takes a cut of the bonus dollars and wires the rest back to the local agency's nursing home.
The potential benefits to the state were clear: More than $80 million in federal dollars could flow to Georgia annually, allowing the state's Medicaid agency to reinvest some of its money into healthcare reforms touted by Barnes.
Officials were so eager to get these dollars that they had even handed out spreadsheets listing how much money each hospital-affiliated nursing home could get. While exact figures depended on a variety of factors, reimbursement rates increased anywhere from 6% to as high as 180%. For instance, at one nursing home in south Georgia, the state projected that bonus payments would boost a $76 Medicaid reimbursement for a day's worth of nursing home care into a $175 Medicare reimbursement — a 127% increase that translated into millions of dollars in extra revenue when spread across hundreds of patients.
If Rollins could convince the state to allow nursing homes owned by a development authority to secure bonus payments, the opportunity would be too good to pass up.
The Mission
The first time Rollins visited his grandmother in a nursing home, his heart sank. The scents of urine, feces and bleach wafted through the halls past communal, cramped quarters. His grandmother was in a wheelchair as a result of breaking her knee in a fall. Rollins, the son of a south Georgia tobacco sharecropper, was in college. His family could not afford to send his grandmother to a nursing home with services like physical therapy. She would never walk again.
"I despised that nursing home," Rollins said. "And I did not visit my grandmother like I should have because I didn't like the place."
As Rollins grew older, he came to see Georgia's dilapidated rural nursing homes as a marker of the broader disinvestment in the state's farming communities. So the man who despised nursing homes became an accountant for them, using his skills to understand the institutional forces that led to his grandmother not getting care. In the late 1980s, he became a part-owner of Care More's nursing homes, and pursued reforms both conventional and unorthodox.
"If I was going to try to solve a problem in my life, this was the land of greatest opportunity," said Rollins, now in his early 60s. "Did it pose some large obstacles? Yes."
Whenever Rollins stepped inside a dilapidated, decades-old nursing home, he saw an opportunity to reinvent rural healthcare. The goal wasn't just to have nicer nursing homes with newer amenities. The rebuilding of physical structures could attract qualified healthcare workers and provide more patients with private quarters. In turn, Rollins said, those changes could improve patient care outcomes, an idea supported by some medical experts and industry groups.
After state officials approved his development authority idea, Rollins persuaded local officials to support his cause. Around 2003, he drove over an hour west of his grandmother's one-time nursing home to Hawkinsville, population 4,500, a quiet river town in rural central Georgia best known for its harness horse racing track and women's state prison. He had recently acquired a nursing home and pharmacy group headquartered there, folding the companies under a newly formed nonprofit network that soon included Ethica nursing homes.
During a meeting with the Pulaski County Development Authority, Rollins agreed to keep nearly 300 jobs there in exchange for nearly $20 million in tax-exempt revenue bonds, issued by the authority and repaid with nursing home revenues. The deal was good for both sides. It provided better rates than a commercial loan, Rollins said. He would then offer the development authority the chance to get a cut of the proceeds from the bonus payments. All it required was for the authority to fill out paperwork and send funds to the state's Medicaid agency, before a deadline.
Rollins hoped the bonus payments, along with tax-exempt bonds, would boost the fortunes of his nursing homes, which had a high number of Medicaid patients. Such nursing homes are more likely to have profit margins of less than 2%, according to the state's leading nursing home association. "In Atlanta, there's a lot of payer sources, but if you're rural Georgia, you have Medicaid," Rollins explained. "We're at their mercy."
At first, the Ethica network received minimal benefit. By late 2007, state records show that the 14 nursing homes affiliated with the Pulaski County Development Authority were collectively eligible for over $5 million in bonus payments each quarter. Rollins said Georgia's Medicaid agency kept most of the bonus payments. CMS eventually proposed a rule that required providers to receive the full amount of the bonus payments. Federal officials never finalized the rule. But Georgia officials revised its Medicaid plan so that full payments went to providers.
The decision benefitted Rollins enormously. But some of his biggest competitors decided that going after the bonus payments was too risky a strategy.
"We did an extensive legal review, because if that money was available, we would love the resources as well," said Neil Pruitt Jr., current chairman and CEO of PruittHealth, one of the South's largest nursing home chains. "We determined that we couldn't do it. It was a liability."
"HUGE cash cows"
Unfazed by the risk, Rollins overhauled his facilities thanks to the bonus payments.
Instead of taking out commercial loans, his companies paid cash for improvements like a $9 million, 32-bed addition at one nursing home in south Georgia and a $10 million expansion with a new Alzheimer's unit at another home in the northwest part of the state. By the early 2010s, Rollins' network had $47 million in construction projects happening simultaneously.
Putting the money toward buildings was perfectly legal. MACPAC, a nonpartisan legislative branch agency that analyzes Medicaid policy, has opined that bonus UPL payments do not have to be "directly related to specific Medicaid services or patients."
The money from the bonus payments allowed Rollins' companies to pour additional money into his healthcare system. He launched companies that supplied his nursing homes with prescription drugs, medical transportation and healthcare supplies. As one former employee put it, "they were HUGE cash cows" that allowed the network to lower costs paid to outside companies. It also freed up enough cash to help the network purchase businesses that owned hospices, home health services, ambulances and a 90-bed rural hospital. Rollins' executives even had enough resources to give gifts of Waterford crystal to top employees and go on expenses-paid Royal Caribbean cruises for "team-building" trips, multiple employees said in sworn depositions for a lawsuit against one of Rollins' nonprofits.
From 2002 to 2013, Ethica-affiliated companies grew their net assets from $17 million to $297 million. That final year culminated with total revenues of approximately $500 million, which, after expenses, resulted in a 7% profit margin. That success didn't benefit development authorities as much, who generally received less than 1% of the funds that moved through the agencies' accounts.
At least nine public agencies — mostly development authorities — moved funds for Rollins' network to obtain bonus Medicaid payments for Ethica nursing homes. They did little else, even though, on paper, they were the owners of the nursing homes. For instance, most of the authorities did not require Rollins' companies to meet specific healthcare benchmarks.
Rollins said the payments were justified because of the jobs created or preserved. "No one ever turned down anything," he said.
But Gerald Beckum, the current head of the development authority in Macon County, said such authorities rarely hire lawyers specializing in bond financing because of their limited resources. Limited oversight follows, he said.
Beckum, who took over the authority in 2015, never dealt directly with Rollins. But the arrangement struck him as strangely complex.
"Not everyone understands this system," Beckum told GHN and ProPublica. "Some people understand the system too well — and figured out how to take advantage of it."
The Investigation
Rollins' loophole caught the eye of federal health officials, who sometime around 2013 discovered that millions of Medicaid dollars had passed through a tiny agency that claimed to own nearly as many nursing homes as there are in the entire state of Alaska.
When a CMS investigator asked Pulaski County officials about the 14 nursing homes they claimed to own, the answer was puzzling: Local officials told the investigator that the development authority "does not own any nursing facilities." The authority's state filings further confirmed it did not own any land or buildings. Yet it was sending money to Georgia's Medicaid agency that made it appear, for purposes of the bonus payments, as though it were an owner of the nursing homes.
More baffling was that none of the nursing homes was actually in Pulaski County. Some were in nearby counties, but most operated in faraway towns that are small dots on a Georgia map: Butler and Barnesville; Leesburg and Lyons; Waverly Hall and Waynesboro.
Then there was the money flow. The development authorities in Pulaski County and elsewhere received payments that traced back to a Rollins nonprofit called Health Scholarships, which was originally created to provide nurses with grants to further their education. Bank records showed that Pulaski County had received $35,000 for wiring nearly $14 million over a two-year period. Adding it all up, the CMS investigators determined that Rollins had convinced development authorities across the state to help collectively obtain tens of millions of dollars in bonus payments since the state approved the loophole.
In December 2014, CMS published its draft report. It did not contain good news for Rollins or for Georgia.
Federal officials ordered Georgia's Medicaid agency to "immediately cease and desist" the use of development authorities to obtain bonus payments. One of the reasons: Federal officials did not believe the development authorities to be the true owners of the nursing homes under investigation.
The state faced a $76 million clawback, a requirement to return money to the federal government, for extra payments obtained through "inappropriate sources," the report said.
Rollins used his influence to fight back. A political donor who, along with corporate executives, gave $200,000 to state GOP races from 2010 to 2014, Rollins secured a seat on then-Gov. Nathan Deal's rural hospital stabilization committee, and he had established a direct line of communication to the governor's top health officials.
Rollins sent a memo to Clyde Reese, commissioner of DCH, and Deal's chief of staff. Rollins described the findings as "deeply flawed." He wrote that CMS had previously approved the state's UPL payment plans, and he claimed the federal agency had erred in its interpretation of Georgia laws.
"This is the greatest issue to ever face our organization," wrote Rollins, who pleaded with Reese to challenge the ruling.
Reese ordered his staff to craft a "very aggressive" response to CMS, hoping to convince the agency to reconsider the clawback. In February 2015, DCH sent CMS a strongly worded letter that included several points raised by Rollins in his memo, noting that the loophole had been cleared through previous federal audits. "CMS' ruling is factually and legally incorrect," wrote Reese, who declined to comment for this story.
Despite Reese's defense, the clawback nevertheless weighed on the mind of his boss.
"Any time you're talking about those kinds of dollars," Deal told reporters in April 2015, "there has to be concern."
Taxpayers on the Hook
Two days before Thanksgiving 2018, CMS denied Georgia's appeal, rejecting its arguments that 34 nursing facilities involved in the loophole's use were publicly owned. CMS noted that the funding used to obtain the bonus dollars originated from Ethica-affiliated companies. Georgia's Medicaid agency appealed the decision and the case now lies with the U.S. Department of Health and Human Services Departmental Appeals Board. A CMS spokesman declined to comment since the case is still pending.
In recent years, other states with bonus payment disputes have not had great luck before the HHS board. In 2016, Alabama was ordered to pay back $72 million intended for rural nursing homes owned by public hospitals, but that the state mostly kept for itself. In 2018, Texas had to pay back $25 million in a dispute over two private hospitals moving money through county hospital authorities to initiate the bonus payments.
Georgia's ongoing dispute has rippled out, affecting other providers statewide. At least three healthcare industry insiders told GHN and ProPublica that the state's hard-nosed defense of the bonus payments has hindered its ability to work with CMS on other initiatives. DCH officials have warned advocates against exploring creative strategies to secure more federal health dollars. The timing wasn't right, with the bonus payments case still in limbo, they said. Others worried the dispute slowed the state's efforts to allow more people to qualify for Medicaid care. "DCH was reluctant to try new Medicaid financial strategies," one source told GHN and ProPublica.
The investigation has rattled some development authorities, too.
Beckum, the head of Macon County's development authority, received a call just last year from an HHS attorney about the dispute. The attorney, Kathleen Duffield, who advised HHS on issues of fraud, waste and abuse, declined to comment. But records obtained from multiple development authorities show that she had asked for more records beyond the initial scope of the 2013 investigation.
Beckum, a former Georgia secretary of state candidate who started his new job after CMS closed the Medicaid loophole, was concerned enough about the call to research the bonus payments before sending records to Duffield. The complexity of the Medicaid payment arrangement left his head spinning a sign that few there actually grasped what the authority was doing. While he understood that rural officials desired to secure jobs for their constituents, he wondered if they had any idea about what had happened.
Rollins said that state officials have never asked him to pay back the $76 million. Nor does he expect them to. The dispute occurred between the two government agencies, he said. In the grand scheme of Medicaid, Rollins said, $76 million was ultimately a small figure for two multibillion-dollar agencies. DCH declined to comment on the matter, citing the pending litigation.
But several lawmakers, lobbyists and policy experts expressed concerns about Georgia's ability to absorb the potential hit with COVID-19 forcing budget cuts to state agencies.
"This couldn't come at a worse time for the state's fiscal situation with revenues cratering from COVID-19," said Erin Fuse Brown, a law professor at Georgia State University.
"The Right Thing to Do"
Today, Rollins has largely abandoned his pursuit of the bonus payments from Medicaid. Backhoes stopped moving dirt as much. Rollins asked his board to cut his $1.3 million salary.
"I felt like I had failed," he said. "I felt personally responsible" — and, with development halting — "I felt it was the right thing to do."
He takes an obvious pride in what Ethica has been able to accomplish. During a tour with GHN and ProPublica on a sweltering morning in early August, Rollins unlocked the doors of a low-slung beige building a short drive north of Macon. The 58-bed Gray Health and Rehabilitation nursing home, which received bonus payments, had sat empty for months. As he stepped through the halls, Rollins noted the flaws of the shuttered nursing home, from shared rooms split by curtains, to window air conditioner units that offered poor ventilation.
Afterward, he showed off Autumn Lane Health and Rehabilitation, a new $12.4 million, 85-bed nursing home that replaced Gray Health and Rehabilitation. Rollins walked the perimeter because anyone who wasn't essential staff himself included — was prohibited from going inside. A "virtual tour" on the facility's website boasted of a "warm and inviting decor," "home-like settings for therapy sessions" and private bedrooms. Those upgrades were the kind that Rollins sought to make at dozens of his nursing homes if the loophole remained open.
"Our country and state needs significant change in nursing facilities — funding for private rooms, building infrastructure," Rollins said after the tours. "COVID-19 would be a much lesser issue today if we did what we advocated. We can't correct the past."
COVID-19 has sharpened focus on the care provided by Rollins' nursing homes. During the pandemic, Ethica nursing homes experienced major shortages of personal protective equipment, forcing staffers to make 15,000 pieces of gear from scratch — including gowns made from plastic sheets. Rollins said Ethica's nursing homes are following Centers for Disease Control and Prevention guidelines for infection control. But nearly 17% of the more than 1,500 residents who tested positive at Ethica nursing homes have died, according to an analysis of state records.
Sixty percent of Ethica's COVID-19 cases have occurred in 15 nursing homes. Besides the facility in Dawson, where nearly a quarter of the residents died in the first two months of the pandemic, they include a nursing home in Richland, where nearly every resident contracted COVID-19. The staff of Bolingreen Health and Rehabilitation in Monroe County, where nearly 50 residents tested positive for COVID-19, was the subject of an Occupational Safety and Health Administration complaint that accused Ethica of "not effectively developed or implemented an infectious disease preparedness and response plan." (OSHA has not posted its final determination on its website. Rollins declined to answer questions about it.) Not only did those nursing homes once receive bonus payments, they had never been rebuilt. Rollins said the bonus payments ultimately paid to renovate or rebuild about a dozen nursing homes.
"Our new facilities generally have not had issues with COVID-19," Rollins said. "They have modern air ventilation systems and are designed to facilitate staff segregation in units. So if there's an outbreak, it'll be more limited and contained."
Most Ethica nursing homes with COVID-19, however, have yet to be renovated.
Arthur Daniels, an 86-year-old deacon who liked to sing gospel songs, was living in an outdated nursing home when the pandemic arrived. Last fall, Daniels was admitted to Sparta Health and Rehabilitation, a 81-bed facility in the rural town of Sparta, population 1,400.
The longtime coach of Hancock Central High School's basketball team, Daniels was best known for convincing twin brothers Horace and Harvey Grant to play basketball. The Grants eventually grew to over 6'8," played college hoops and were both drafted into the NBA. Horace, an all-star, won three championships with the Chicago Bulls in the 1990s.
The Sparta nursing home had once benefitted from the Medicaid loophole thanks to the Pulaski County deal. But it never got renovated. It now has staffing rates, along with patient care measures such as rates of residents who were hospitalized or injured by falls, that are worse than the national average reported to Medicare. Daniels visited with his longtime friend, Dianne Huffman, every other day until Georgia officials restricted nursing home guests. This past May, COVID-19 spread through the nursing home. Thirty-three staff members and 59 residents tested positive. Nineteen residents, including Daniels, died from COVID-19.
At a socially distanced funeral, Nathaniel Snead, the pastor of Daniels' church, read a passage from the Bible that connected Daniels' life to the pandemic that had torn through Georgia, Sparta and the nursing home owned by Rollins. "You don't know whom God will keep here and how long he will keep us here," Snead said. "To keep you here is going to take more than a mask."
Within three weeks, the Bria of Geneva nursing home went from one case of COVID-19 to two dozen residents dead and at least 75 infected. Delayed testing and gaps in nursing home data obscures the true toll of the crisis.
Shortly after showing off Ethica's Autumn Lane nursing home, Rollins was asked what he'd tell the families of patients like Daniels. He stared off into the distance, holding back tears. After nearly a minute of silence, he mentioned Oxley Park Health and Rehabilitation, the nursing home where his grandmother once stayed, which he now owned. His brother-in-law currently lived in the same home and had recently tested positive for COVID-19. Rollins explained: "In rural communities like where I'm from, and where my family is located, it's been especially difficult. The choice is: Do you stay [at home] in the community, where you know there's active cases, or do you remain in the nursing facility?"
Rollins' family ultimately decided it was safest to keep his brother-in-law at Oxley Park. It happened to be one of the facilities Rollins had managed to upgrade before the loophole closed. State records showed that 40 people had tested positive for COVID-19. Thirty of those people have since recovered. His brother-in-law survived. (Three residents have died.)
Rollins once envisioned similar upgrades in Sparta. But with the loophole closed, his dreams were deferred. He now thought about the families of the deceased and what he might say. Having collected his thoughts, he looked up and offered a brief explanation: "We did the best we can do."
About the data: Georgia Health News and ProPublica collected COVID-19 data compiled by the Georgia Department of Community Health. The department requires long-term care facilities with 25 or more beds to report figures on positive cases among patients and staff members, patient deaths, and resident censuses. To calculate the death rate, we divided the number of deaths by bed capacity, as the state only reports resident census figures for homes that experienced outbreaks.
ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they're published.
More than 50,000 workers have taken time off for virus-related reasons, slowing mail delivery. The Postal Service doesn't test employees or check their temperatures, and its contact tracing is erratic.
This article was published on Friday, September 18, 2020 in ProPublica.
For months, one postal worker had been doing all she could to protect herself from COVID-19. She wore a mask long before it was required at her plant in St. Paul, Minnesota. She avoided the lunch room, where she saw little social distancing, and ate in her car.
The stakes felt especially high. Her husband, a postal worker in the same facility, was at high risk because his immune system is compromised by a condition unrelated to the coronavirus. And the 20-year veteran of the U.S. Postal Service knew that her job, operating a machine that sorts mail by ZIP code, would be vital to processing the flood of mail-in ballots expected this fall.
By mid-August, more than 20 workers in her building had tested positive for the coronavirus. Then, in a list of talking points on her supervisor’s desk, she spotted a reference to a new positive case at the plant. She had heard that someone she’d worked with closely a few days earlier was out sick, but no one at USPS had told her to quarantine, and no contact tracer had reached out to her. Although USPS’ protocol is to tell workers when they’ve been exposed to COVID-19, that didn’t happen, she and another postal worker familiar with the case said.
Asking around, she learned that a colleague she’d partnered with to load mail into the sorting machine had been infected. She phoned her doctor, who advised her to quarantine and get tested. Later that week, she tested positive and began suffering body aches, a sore throat and fatigue.
“They should’ve told anybody who worked with him, ‘You need to go home.’ What is it going to take, somebody to die in the building before they take it seriously?” said the worker, who requested anonymity for fear of retaliation.
In recent weeks, furors over Postmaster General Louis DeJoy’s cost-cutting initiatives, and over President Donald Trump’s unsubstantiated warnings of voter fraud, have overshadowed a significant threat to the Postal Service’s ability to handle the expected tens of millions of mail-in ballots this fall: a rapid rise in the number of workers sidelined by COVID-19.
The total number of postal workers testing positive has more than tripled from about 3,100 cases in June to 9,600 in September, and at least 83 postal workers have died from complications of COVID-19, according to USPS. Moreover, internal USPS data shows that about 52,700 of the agency’s 630,000 employees, or more than 8%, have taken time off at some point during the pandemic because they were sick, or had to quarantine or care for family members.
High rates of absence could slow ballot delivery in key states, especially if there’s a second wave of the coronavirus, as some epidemiologists predict. Twenty-eight states, including Pennsylvania, Wisconsin and Florida, require mail-in ballots to arrive by Election Day to be counted.
Even in a normal year, absentee levels of this magnitude “would have a dramatic effect on the mission of the postal service,” said Alan Kessler, an attorney who served on the Postal Service’s Board of Governors during the Clinton and George W. Bush administrations, including as chairman from 2008 to 2011. “When people ask me about November, my biggest concern right now is exactly that — the on-time delivery of mail.” Kessler is a former finance vice chair of the Democratic National Committee.
What vacant positions have been filled at USPS have been filled by less experienced temporary workers. Restrictions on overtime pay under DeJoy may have prevented full-time workers at some facilities from adding hours to pick up some of the slack. While USPS has nearly $14 billion in cash, it reserves some of that funding to pre-pay employee pensions, and it is projected to run out of money next spring. On Thursday, a federal judge in Washington state temporarily halted operational changes that have slowed mail delivery, finding that “at the heart of DeJoy’s and the Postal Service’s actions is voter disenfranchisement.”
As the St. Paul worker’s case illustrates, the Postal Service’s half-hearted precautions against COVID-19 have contributed to the problem. Its efforts to limit the virus’s spread in the workplace fall short of recommendations by the Centers for Disease Control and Prevention. Unlike Amazon, which relies on USPS to help deliver its packages, the Postal Service doesn’t test workers or check their temperatures, depending instead on self-reporting. When employees get sick, USPS sometimes neglects to tell co-workers, and its efforts at contact tracing have been inconsistent and understaffed.
Reflecting these shortcomings, the U.S. Occupational Safety and Health Administration has received more than 250 coronavirus-related complaints against the Postal Service since March, more than twice the number filed against private employers in the same industry like Amazon, FedEx and the UPS. Amazon, which has almost 250,000 more workers than the postal service, had 117 complaints. The complaints against USPS paint a worrisome picture. They typically allege failures to maintain social distancing, enforce mask wearing or inform workers when colleagues have the virus.
The tally doesn’t include open complaints yet to be made public, including one by another worker in the same St. Paul building. That July complaint, obtained by ProPublica, accused USPS of “not communicating and informing employees that may have potentially been exposed to positive COVID-19 employees,” as well as inadequate ventilation and six other hazards. The Postal Service responded to OSHA that it traces contacts of all employees who test positive and encourages ailing employees to stay home. Nevertheless, OSHA told the complainant that it will inspect the facility as soon as possible.
The Postal Service has been adamant that it can handle a nationwide increase in voting by mail in the general election. Even a mass shift to mail-in ballots would represent a small portion of its overall volume.
Still, DeJoy, a major donor to President Donald Trump and the Republican Party, acknowledged in congressional testimony last month that COVID-19-related absences had upended mail service. “Across the country, our employee availability is down 3 to 4% on average,” DeJoy said. “But the issue is in some of the hot spots in the country, areas like Philadelphia and Detroit — there’s probably 20 [other areas] the averages cover — they could be down 20%. And that is contributing to the delivery problem that we’re having.”
The Postal Service referred us to an April 30 statement on its website. Its COVID-19 leadership team “is focusing on employee and customer safety in conjunction with operational and business continuity during this unprecedented epidemic,” according to the statement. “We continue to follow the strategies and measures recommended by the Centers for Disease Control and Prevention and public health departments.”
Among its initiatives, the statement said, the Postal Service is supplying its more than 30,000 locations with masks, gloves and cleaning supplies. Employees who can’t maintain social distance must wear masks. The service has reduced employee contact with the public by eliminating a rule that customers must sign mobile devices for deliveries, and it has updated its leave policy to allow workers to take extra time off for illness and child care.
Postal workers who test positive are supposed to tell their supervisor, who should alert a nurse responsible for contact tracing. But communication is sometimes lacking. “They have the occupational nurse doing the contact tracing, but sometimes there’s no contact with the worker. And some managers don’t report [the case] to the tracking. Some managers tell people, ‘You don’t sound sick, come to work,’” said Omar Gonzalez, western regional coordinator at the American Postal Worker Union. “So we don’t really know what to rely on.”
One reason that the system breaks down is a shortage of contact tracers. USPS, which does not provide medical care to workers, employs about 160 nurses. Alongside other administrative duties, they are supposed to register COVID-19 cases and interview workers when they get sick. In the New York district, one nurse has been responsible for contact tracing for about 8,200 employees; in Detroit, the ratio is two nurses per 11,600 workers; and in Atlanta, one for 12,500. Facilities in all three districts have seen coronavirus outbreaks. USPS has reemployed 10 former agency nurses to assist with contact tracing, according to a spokesperson.
“To use the word contact tracing is a joke,” said Jonathan Smith, president of the New York metro area’s postal worker union.
Coronavirus outbreaks in several areas have correlated with slower delivery times. First-class delivery has slowed since March, with notable lags in New York, New Jersey, Philadelphia, Detroit, Chicago, Houston and Southern California, according to data from GrayHair Software, which tracks postal analytics.
COVID-19 has “caused severe disruptions to on-time delivery in many parts of the country,” the U.S. Senate Committee on Homeland Security and Governmental Affairs reported this week. In late March and early April, it found a spike in cases in Michigan, “especially in the Detroit area,” led to a “notable drop in on-time delivery.”
In Philadelphia, where more than 235 postal workers have tested positive, local media outlets reported unsorted mail piling up in postal facilities and carriers unable to complete routes even after working extra hours. Some residents said they went two to three weeks without receiving mail. In April, COVID-19-related delays in Detroit facilities slowed delivery of primary ballots for parts of northwest Ohio, prompting Ohio’s secretary of state to call for in-state processing of all ballots. In Michigan’s August primary election, more than 6,400 residents’ votes weren’t counted because they arrived after the deadline, though it’s not clear whether COVID-19 was a major factor.
Internal USPS data from its southern region in mid-August shows the impact of the coronavirus on workers. In Atlanta, more than 900 postal workers had been infected with COVID-19 or had to quarantine. More than 550 workers were affected in Houston and an additional 485 in South Florida.
COVID-19 outbreaks have strained postal offices that had inadequate staffing even before the pandemic, said Michael Caref, national business agent of the Illinois chapter of the National Association of Letter Carriers. “Now you’re seeing crisis levels in some areas.”
In March, the Postal Service donated 500,000 N95 masks “in excess of our needs” for distribution to hospitals and other critical workers, according to a draft letter from the Board of Governors to members of Congress that was made public by American Oversight. However, the service doesn’t provide N95 masks, which are considered especially effective at filtering out virus particles, to most of its own employees. A Postal Service spokesperson said USPS supplies N95 masks to employees who require them. Other workers receive surgical masks.
The CDC and OSHA have both released guidance on how employers should protect workers, though it does not carry the power of law. According to the CDC, “businesses and employers can prevent and slow the spread of COVID-19 within the workplace.”
The CDC advises employers to “consider conducting daily in-person or virtual health checks (e.g., symptom and/or temperature screening) of employees before they enter the facility.” The Postal Service doesn’t conduct those checks. The onus falls on workers to stay home if they notice symptoms, get tested, report back on results and recall whom they were in contact with.
At Amazon, which has also been criticized for failing to protect its employees during the pandemic, precautions are more stringent. According to an Amazon spokesperson, the company does daily temperature checks and has installed thermal cameras at some of its sites. When an employee is exposed, the company “immediately kicks-off contact tracing to determine if anyone was exposed to that individual, and we inform those employees right away and ask them to quarantine for 14 days with pay,” the spokesperson said.
FedEx’s protections also appear more robust than the Postal Service’s. FedEx checks temperatures of employees at some of its sites, and it has expanded testing to 43 locations since July, according to a company spokesperson.
The CDC advises employers to collaborate with local and state health departments on contact tracing. According to its guidance, employees who are asymptomatic but have been within about 6 feet of a person with COVID-19 for a prolonged period of time should self-isolate and quarantine for 14 days. Often, contact tracing is needed to identify those employees.
But even when USPS employees report positive tests, supervisors don’t always follow through. In August, an asymptomatic employee in Flint, Michigan, tested positive for COVID-19 and told a supervisor as well as a few co-workers. The worker stopped coming in, but the supervisor didn’t inform USPS’ medical unit until four days later — after the exposed workers had told their union, which in turn reported the case to management. Michael Mize, the local postal union president, said he pushed the supervisor to report it. A USPS nurse started contact tracing on the fifth day.
“That’s way too slow,” said George Rutherford, a professor of epidemiology and biostatistics at the University of California at San Francisco School of Medicine.
Because most people infected with COVID-19 often begin shedding large amounts of virus four or five days after they’re exposed, even if they’re asymptomatic, co-workers in Flint might have transmitted the disease before the nurse contacted them, Rutherford said. “That’s why you gotta get on this stuff quickly.” According to CDC guidance, exposed co-workers should be contacted and tested within 24 hours.
USPS and union officials had a Zoom call to discuss what went wrong in Flint, Mize said. “Luckily we don’t have any major outbreaks because of any failures that happened,” he said. “If things aren’t handled appropriately, you’re relying on good fortune.”
Roscoe Woods, a Detroit-area postal union president, said that USPS sometimes lacks up-to-date contact information, complicating the task of contact tracers. In addition, employees often don’t know the surnames of exposed co-workers. “You’re trying to trace down eight people and all their contact information is bad,” said Woods, who has stepped in to help with contact tracing in the past.
When employees are sidelined because of the coronavirus, USPS can fill in some of the gaps by hiring employees who aren’t in the union. But the Postal Service has long had trouble hiring and retaining temporary or non-career employees, and union representatives say the Postal Service has been slow to fill these roles during the pandemic.
In February, the Postal Service’s Office of Inspector General faulted the agency for failing to recruit and retain nonunion workers. In 2019, the annual turnover rate for non-career employees, who constitute 21% of the workforce, was 38.5%; the average tenure for workers who left their jobs was just 81 days. One of the top reasons for leaving: Workers said that supervisors didn’t treat them with respect. The jobs filled by these workers are physically strenuous, pay about $17 an hour, lack benefits and often require an inconsistent work schedule. It can take weeks to hire and train them.
“The hiring process is really slow,” Caref said. “And if you have a person that says they want to work, the person is not prepared for a month after they’ve been hired. They really need to figure that out.”
Virus-related OSHA complaints from around the country reflect some of the dangers and frustrations postal workers have faced throughout the pandemic.
“The station and the vehicles have not been cleaned and sanitized. Bleach spray bottles were provided at one time but the employees were not provided material to wipe down surfaces and the bottles have since broken,” reads a complaint filed from Houston on June 18. “Employees in the vehicles do not have hand sanitizer or another method to cleanse hands while away from the station.”
In a postal facility in Smithtown, New York, “the air conditioning has not been working properly for the last 3-4 weeks (blowing 81 degrees at the vent) which has made working in the building uncomfortable and may be contributing to employees not wanting to [wear] their masks,” a complaint stated in mid-July. It’s unclear what action, if any, OSHA took on the Houston and Smithtown complaints, which are now closed.
Since the worker in St. Paul began quarantining in mid-August, there have been at least 11 COVID-19 cases at her workplace, according to Postal Service emails obtained by ProPublica. Overall, at least 33 out of more than 1,000 workers have tested positive at the building since the start of the pandemic.
In USPS’ Northland District, which covers Minnesota — including the St. Paul plant — and western Wisconsin, at least 148 workers have tested positive. “We had a record breaking day with COVID-19 positive cases today. 18 employees must be quarantined. This is not a good record,” reads an Aug. 25 email from USPS management to unions regarding the Northland District.
“We had 4 new COVID-19 cases reported today. Things aren’t getting any better,” management said in an email two days later.
No one replaced the St. Paul postal worker while she was out. She returned to the job this month, even though she was still recovering and low on energy, because she needed the money. After two weeks of sick leave, her days off were unpaid, and her husband hasn’t worked for four months because of an unrelated health condition. Plus, the situation at the plant has improved somewhat: Social distancing has become mandatory in the break rooms, and employees were warned that not wearing masks could jeopardize their jobs.
She also felt a civic obligation, because she’ll be responsible for processing thousands of ballots in the upcoming election.
“That’s another reason why I want to go back to work,” she said. “I want to make sure the ballots get run.”
Are you participating in a coronavirus vaccine trial? Are you a scientist or manufacturer working to develop and bring a vaccine to market?
Or do you work for or with a government agency charged with making sure a COVID-19 vaccine will be safe and effective?
Help us understand what we should be covering or serve as an expert to make sure we’re on the right track.
Our stories focus on holding the powerful accountable in service of the public.
We have already reported on failures in testing, the effectiveness of popular hand sanitizers and hospitals retaliating against medical providers for bringing their own masks to work.
The development and deployment of a vaccine will affect everybody on the planet. Let’s work together to identify and tell important stories.
Want to talk to us about education during COVID-19? Head here. Want to give us coronavirus-related tips that are not about vaccines? Talk to us here.
The Louisiana Legislative Black Caucus called the practice of sending infected coronavirus patients home to die "disturbing" after ProPublica found that one New Orleans hospital system had done so numerous times.
This article was published on Monday, September 14, 2020 in ProPublica.
The Louisiana Legislative Black Caucus has called for an investigation into the practice of sending infected coronavirus patients into hospice facilities or back home to their families to die.
The legislators' demands follow reporting by ProPublica that foundthat while many hospitals around the country decided not to use home hospice care for coronavirus patients — due to the infectious nature of the disease and the unpredictable and sometimes difficult-to-control symptoms — Ochsner Health, the largest hospital network in Louisiana, sent COVID-19 patients in New Orleans home with hospice care. Several families said that Ochsner staff pressured them into discontinuing treatment, even as they pushed back.
In the dozens of cases ProPublica examined, every patient who died after the hospital sent them home was Black.
"We have to make sure that we have a third party look at these things," Louisiana state Sen. Troy Carter of New Orleans, a member of the caucus, told ProPublica. "We take this example and this opportunity to shine light on something that's happening in real time, and we put in systems to make sure it never happens again — particularly when you have hospitals that receive state dollars."
Last Tuesday, Gov. John Bel Edwards met with members of the caucus, which includes 37 legislators, to discuss the findings of the article. Carter, who attended the meeting, said the governor and his staff were receptive to the caucus's concerns. "They were very open and as eager to get to the bottom of this as we are," Carter said. The governor's office did not immediately respond to ProPublica's questions about the inquiry.
On Wednesday, the caucus sent a joint letter to the governor calling for a "full investigation" into the practices laid out in ProPublica's reporting and citing "myriad of phone calls into [their] office."
In response to questions about the caucus's letter, a spokesperson for Ochsner Health told ProPublica that it follows the guidance of the Centers for Medicare and Medicaid Services when discussing end-of-life options. "Like other health systems in pandemic hot spots, we had patients who chose hospice care when leaving our facilities," the spokesperson said. "Patients and their families make the choice that is best for them regarding hospice, including home hospice."
ProPublica analyzed data from the Centers for Disease Control and Prevention and the local coroner's office and found that an abnormal number of elderly patients died at home in New Orleans. Nationally, coronavirus patients ages 85 and older died at home only 4% of the time. In New Orleans, it was 17%.
ProPublica attempted to contact the families of everyone who died at home in the city through early May. These interviews revealed that before they died, about two dozen Black patients first sought care at a hospital, which then discharged them, in many cases sending them home to die with hospice care. The vast majority were sent by facilities owned by Ochsner Health.
The families of eight patients told ProPublica that Ochsner staff pressured them into accepting hospice care for their loved ones who had COVID-19, even as some questioned or pushed back against the suggestion. Three families said they were told that there wasn't enough space to continue treating the patient in the hospital, or that the hospital needed the bed for another patient.
Once patients came home, family members said they did not receive protective gear from hospice companies, and several told ProPublica that hospice workers were absent during crisis moments when they felt unable to manage their loved one's pain. At least two relatives got sick after being denied the proper protective gear.
As capacity shrunk, several nurses told ProPublica, Ochsner employees adopted an unusual method to withhold life-sustaining care from patients with poor prognoses. In some cases, doctors gave patients do-not-resuscitate orders without family or patient consent, sometimes overruling families that wanted everything done for their loved one, three nurses said. Ochsner denies that this ever happened.
While Ochsner Health did not respond to ProPublica's questions about families feeling pressured into hospice, hospital officials later told a local newspaper, The Times Picayune and The Advocate, that in some cases, sending hospitalized patients home "had a positive effect," according to the article's summary of Ochsner's comments. "Several patients who were sent home for palliative care rebounded and lived, thanks to the presence and support of their friends and family who couldn't be with them inside of the hospital, the officials said."
In New Orleans, hospitals sent patients infected with the coronavirus into hospice facilities or back to their families to die at home, in some cases discontinuing treatment even as relatives begged them to keep trying.
Hospice involves halting curative treatment, and Medicare only permits it for terminally ill patients who have six months or less to live.
State Sen. Gregory W. Tarver Sr., another member of the caucus, told ProPublica that Ochsner should be investigated in order to ensure that the issues are taken seriously. "You can't just smooth it over, sweep it under the rug, when someone loses their life," he said.
In the letter to the governor, the caucus requested that the state scrutinize what was done to ensure that people who died at home "were properly attended to" and verify how many families received proper protective equipment when caring for home hospice patients.
The letter also asked "who made the final call" on patients' care when hospice was "not in line with what the family desired," and it said that infectious patients should not be sent home for hospice. The legislators urged the state to determine if providers had any connection to the hospice companies they were referring to — whether Ochsner had any ownership stake in them or any hospital physicians were simultaneously affiliated with hospice companies.
"This information is very disturbing for us as leaders of our state to read," wrote state Sen. James Harris III and state Rep. Barbara West Carpenter, the chairman and vice chairwoman of the caucus. "Many people normally do not question medical practitioners because they feel they are right with their prognosis, diagnosis and decisions they share with the patients."
Ochsner did not answer ProPublica's questions about doctor affiliations with hospice companies. The organization also did not respond when asked if it had investigated or planned to investigate potential racial disparities in discharge practices.
Following the publication of ProPublica's investigation, Dr. Robert Hart, Ochsner's chief medical officer, told The Times Picayune and The Advocate that he was "disappointed at the tenor of the article trying to make it about race."
But Tarver said that racial disparities in medicine are well-established and must be addressed head on. "History has proven that there's just as much racism per square inch in the hospital [as anywhere else]," he said. "You have to ask yourself, would they have done this if these people were white? I'm telling you they wouldn't have. They would not have discharged them if they were white."
As an editor, I've long had mixed feelings about the journalistic tradition of marking particular chronological or numerical milestones. No one wanted to avoid the "Sept. 11: One Year Later" package — and I was eager to do it given the six previous years I'd spent directing global coverage of al-Qaida — but the annual stories seemed far more forced by Sept. 11, 2005.
More recently, we've seen stories like "World War I: A Century Later" or "The 75th Anniversary of the End of World War II." They're often illuminating, but they don't have deeper meaning than stories that might have been published on the 99th or 74th anniversary of those events.
And yet, there are milestones worth stopping to consider. At ProPublica, it was Andrea Wise, a story producer working for us on contract, who in early May asked: What are we planning for the 100,000th confirmed COVID-19 death? The result was a story we published on May 27 by Caroline Chen that looked back at how we got here and forward to how we might avoid reaching another grim milestone. As we wrote at the time: "The full tragedy of the pandemic hinges on one question: How do we stop the next 100,000?"
Not Shutting Up
The sad, infuriating answer for the country that spends more per capita on healthcare than any other in the world: We couldn't.
That makes this a moment worthy of some reflection. The United States will record the 200,000th COVID-19 death in days, just four months after the toll hit 100,000. Caroline pointed out in May that the best way to slow the spread of the virus would be to deploy "the oldest mitigation tactics in the public health arsenal." That would have meant widespread testing to identify those who had caught the virus, quarantining and tracing the contacts of both symptomatic and asymptomatic carriers who could spread the disease to the most vulnerable.
"Being slow to act comes with a terrible cost," she wrote.
Caroline and I had pulled together a list of many of the steps to slow down the virus in a road map we addressed to the nation's governors back in April. Our advice was drawn from interviews with health authorities and experts in countries that were successfully battling the pandemic.
Hardly any states followed the practices that had worked well elsewhere. Instead, we saw President Donald Trump convene an indoor political rally in Tulsa, Oklahoma, attended by thousands of people, some of whom have since died of COVID-19. In Sturgis, South Dakota, motorcycle enthusiasts proudly refused to wear masks or socially distance; that gathering has recorded its first fatality from the virus. Inexorably, the novel coronavirus marched across the United States, spreading from New York City and Seattle into the smaller cities and then the suburbs and rural communities. It displayed no real preference for blue or red states, though it has disproportionately harmed Black, Latino and poorer communities.
Our reaction? As a nation, we became inured to a national death toll that has only recently dropped below a thousand people a day. Think about that. Every week, we lose far more of our fellow citizens than died 19 years ago in the most devastating terrorist strike in American history.
As the summer months turn to fall, and the science about the virus grows more definitive, the national conversation has drifted further and further from the basic science. The wearing of masks has somehow turned into just another symbol of partisan warfare, with Trump accepting the Republican nomination on the White House lawn before a tightly packed crowd in which few wore face coverings. As the numbers of cases slowly drift down toward a plateau well above most industrialized countries, senior officials have begun speaking of the virus in the past tense.
Then there's Trump's expectation that there will be a vaccine approved "some time during the month of October." The signs are encouraging. Multiple companies are reporting positive results from their phase 1 trials. But more than one promising pharmaceutical discovery has failed in phase 3. Just this week, AstraZeneca halted its trial after one of the volunteers who took the company's experimental coronavirus vaccine developed neurological problems. (The company is now reviewing whether the symptoms are in any way related to the drug.)
Americans were skeptical about vaccine safety before this week's disclosure that Trump had privately acknowledged the dangers of the coronavirus to journalist Bob Woodward while publicly proclaiming COVID-19 a "hoax" that would soon disappear. Release of a drug before all the data is gathered risks undermining the foundational principle of vaccination, which depends on inoculating very large numbers of people. With pharmaceutical companies publicly pledging not to release a vaccine that has not been fully tested, the odds of a game-changing medicine before 2021 are slim.
All of that brings us back to the things that are proven to work: the old-fashioned methods of social distancing, washing hands, wearing masks, tracing contacts and quarantining the sick. Many countries around the world, from Germany to South Korea to Singapore to Vietnam, have used these techniques to contain the virus. Yes, there are explanations for some of those successes. Islands, with the glaring exception of the United Kingdom, may have some advantages over countries with land borders (though plenty of African nations have very low death rates). Authoritarian governments have more options to coerce citizen cooperation. Asian countries lived through the SARS and MERS outbreaks.
But one need only consider Germany, an industrialized nation of 83 million people, to see how much better the U.S. could have done. So far, only 9,336 Germans have died from COVID-19, a rate of 11.26 per 100,000 citizens. By contrast, our death rate is roughly 58 per 100,000 Americans, more than five times Germany's per capita toll. And while the number of daily deaths is slowly falling here, it's still far higher than most countries with comparable investments in healthcare.
More than two decades ago, I wrote a book with my New York Times colleagues Judith Miller and Bill Broad called "Germs" that looked at the modern history of biological warfare. As a result, I was invited in the early aughts to play a Times reporter in a "tabletop" exercise organized by New York City. The health commissioner at the time, Dr. Tom Frieden, played the part of the health commissioner as we went through a dystopian scenario involving a mass anthrax attack on the subways. As the plot unfolded, various players were pushed into ethically uncomfortable questions. At one point, it was suggested that reporters like me had learned that the city lacked sufficient antibiotics to treat everyone who was dying. Would the Times agree to a request from Frieden to withhold that story from its readers? (I said I would not, but I wasn't the boss.) The scenario turned darker. As word got out about the shortages, mobs began breaking into pharmacies to secure medicine. Healthcare workers refused to go to hospitals. The city fell into chaos.
Each person who has died of COVID-19 was somebody's everything. Even as we mourn for those we knew, cry for those we loved and consider those who have died uncounted, the full tragedy of the pandemic hinges on one question: How do we stop the next 100,000?
That exercise assumed that the city's public health system continued to function reasonably well and that individual hospitals or doctors would not be left on their own to figure out what to do. It now seems clear that the U.S. approach, which was to let every state governor and many mayors set their own policies, was far from optimal.
As we head into the fall, a number of the models are projecting an easing of the death toll, which was well over 1,000 Americans a day at its height. One of the most accurate models, by independent data scientist Youyang Gu, projects that the death rate will fall to 400 per day by Nov. 1, with a projected death toll of 218,000.
We will continue to report on every aspect of this horror, from its disparate racial impact to the failures of corporations as well as city, state and federal governments. All we can ask of you, the readers, is that you not become accustomed to this grim routine. We were willing to put up with massive disruptions to our lives after the 9/11 attacks left 3,000 Americans dead. One of Gu's most fascinating models shows that the deaths from COVID-19 in the United States would have been halved if just 1 in 5 people with active symptoms had self-quarantined.
Here's hoping that a trustworthy vaccine becomes widely available in the coming months or that more people find ways to self-isolate if they become ill. It is my dream that we will never have to write the story about 300,000th COVID-19 death.
The type of pollution emitted by many chemical plants in Louisiana's industrial corridor is correlated with increased coronavirus deaths, according to new peer-reviewed research from SUNY and ProPublica.
This article was produced in partnership with The Times-Picayune and The Advocate, which was a member of the ProPublica Local Reporting Network in 2019.
The industrial plants in the riverside Louisiana city of Port Allen have worried Diana LeBlanc since her children were young. In 1978, an explosion at the nearby Placid oil refinery forced her family to evacuate. "We had to leave in the middle of the night with two babies," said LeBlanc, now 70. "I always had to be on the alert."
LeBlanc worried an industrial accident would endanger her family. But she now thinks the threat was more insidious. LeBlanc, who has asthma, believes the symptoms she experienced while sick with the coronavirus were made worse by decades of breathing in toxic air pollution.
"That is the one time in my life I thought, I'm not going to survive this," she said. "I'm going to become a statistic. I was that sick."
New research, conducted in part by ProPublica, shows she could well be right.
COVID-19 can be made more serious — and, in some cases, more deadly — by a specific type of industrial emission called hazardous air pollutants, or HAPs, according to new peer-reviewed research by ProPublica and researchers at the State University of New York College of Environmental Science and Forestry. The study, published Friday in the journalEnvironmental Research Letters, found this association in both rural counties in Louisiana and highly populated communities in New York.
The analysis examined air pollution and coronavirus deaths in the roughly 3,100 U.S. counties and found a close correlation between levels of hazardous pollutants and the per-capita death rate from COVID-19.
The U.S. Environmental Protection Agency defines HAPs as chemicals known or suspected to cause cancer and other serious health problems. Under the Clean Air Act, industrial facilities emitting these pollutants are subject to regulations.
Hazardous air pollution may help explain the disproportionate number of COVID-19 deaths in communities like West Baton Rouge Parish, home to Port Allen. With 39 deaths as of Sept. 7, the parish's per-capita death rate from COVID-19 ranked it among the top 3% of all U.S. counties with at least 30 deaths. Several of its neighbors in Louisiana's industrial corridor also rank near the top of the list.
COVID-19 and Air Pollution Exposure
The coronavirus pandemic, which has claimed over 189,000 lives across the country, including more than 4,900 in Louisiana, offers a rare opportunity to study the public health outcomes of both short- and long-term air pollution exposure.
Because the virus affects the respiratory system, researchers have rushed to study the potential association between mortality rates and air pollution. Early studies, including one looking at particulate matter — distinct from HAPs, but often found with them — have suggested a link.
Last year, The Times-Picayune and The Advocate and ProPublica published the series Polluter's Paradise, which used data from an EPA model to quantify levels of hazardous air pollution along the lower Mississippi River's industrial corridor. As the virus battered many of those same communities this spring, we wanted to determine whether air quality was contributing to high death rates.
The SUNY-ProPublica analysis uses pollution information from the EPA's 2014 National Air Toxics Assessment, a screening tool aimed at helping state agencies identify and measure the sources of HAPs. These pollutants can come from industrial facilities as well as from power plants and vehicles.
NATA combines information on pollutants that affect the respiratory system into a variable called the "respiratory hazard index." The analysis found that an increase in the hazard index at the county level corresponded to an increase in COVID-19 death rates. This association existed at all levels of HAPs exposure, including levels that the EPA deems acceptable.
The analysis controlled for a long list of variables, including population density, income, race and age, as well as community health indicators such as prevalence of smokers, adult obesity, preventable hospital stays and physical inactivity.
Peer Review
A recent study by researchers from Harvard's T.H. Chan School of Public Health found that long-term exposure to particulate matter made the coronavirus more deadly. But EPA officials and industry groups have dismissed the research primarily on the basis that it lacks peer review, a standard but time-consuming process where new research is evaluated by independent experts prior to publication.
ProPublica and The Times-Picayune and The Advocate sent the EPA a copy of the new analysis on hazardous air pollutants, which has been peer reviewed, seeking comments. Enesta Jones, a spokeswoman for the agency, said that understanding the links between air pollution and COVID-19 is a "complicated process that will take many years."
"The research in this area is just beginning, and EPA looks forward to reviewing papers once they are peer-reviewed and published," she said.
Cancer Alley
The industrial corridor that stretches alongside the Mississippi River from Baton Rouge to New Orleans is nicknamed "Cancer Alley" because of the perceived health risks associated with local chemical emissions. LeBlanc considered herself lucky because no one in her family has had cancer. But she does have asthma, and so do two of her three children.
According to EPA data, West Baton Rouge Parish has more air pollution that affects the respiratory system than 99% of counties nationwide.
Research has long supported an association between asthma and exposure to air pollution. While researchers are not sure how this happens, they believe air pollutants could prevent the body's immune system from being able to tell the difference between a harmless allergen and a dangerous particle, like a virus. The U.S. Centers for Disease Control and Prevention has said that people with asthma are at higher risk of getting very sick from COVID-19.
In mid-March, LeBlanc began having flu-like symptoms. It started as a fever and cough. "Then, the second week it got doubly worse," she said. LeBlanc went to a drive-thru site in Baton Rouge to get tested for coronavirus. Her test came back positive.
She was sicker than she'd ever been. "I had nightmares. I had coughing. I had aches in my bones. I couldn't even touch myself," she said. "That's how painful it was."
LeBlanc has nearly recovered. But she said she still has not regained her senses of smell and taste and she gets fatigued more quickly. She believes her debilitating symptoms owed partly to her compromised immune system. "Now what causes your immune system to be down? Is it the air you're breathing?" she asked.
Dr. Michael Brauer, a professor of public health at the University of British Columbia, said there is substantial evidence of a link between air pollution and respiratory infections. "If you're exposed to a viral infection or bacterial infection and at the same time are exposed to air pollution, that infection is more likely to become severe," he said.
But air pollution can also have permanent effects on health that make COVID-19 symptoms more severe, whether or not a person continues to breathe in polluted air. Vijay Limaye, an environmental health scientist with the Natural Resources Defense Council's Science Center, said that short-term declines in air pollutants in New York City due to lockdown measures in March and April did little to protect populations suffering from long-term exposure.
"In some cases, damage to our lungs, our brains, our hearts from air pollution is irreversible. And there are certain harms inflicted by these exposures that can't be mitigated even after months or years of breathing cleaner air," said Limaye.
Asthma Alley
ProPublica and SUNY researchers created a nationwide ranking of counties by combining two variables: COVID-19 mortality rate and the quantity of pollution affecting the respiratory system. First on the list is the Bronx, a borough that was hit particularly hard by COVID-19.
"The air quality issues here and the type of decision-making that's happened over and over has made us Asthma Alley," said Mychal Johnson, an organizer from the South Bronx, referencing the local nickname of an area with one of the highest asthma hospitalization rates in the country.
"Waste transfer stations, fossil fuel power plants, heavy diesel trucking," Johnson said, listing the various sources of pollution in the South Bronx. "We knew that what we had been fighting all these years was only going to make us more susceptible to COVID mortality."
While all of New York City's five boroughs except Staten Island occupied slots in the study ranking's top 20, the remainder of the list included more sparsely populated counties in Louisiana, Alabama and Georgia that contain industrial facilities or power plants. Five counties in the top 20 are located on the lower Mississippi River in Louisiana's chemical corridor, including West Baton Rouge Parish.
LeBlanc's son moved his family to a farm farther away from chemical plants in the parish because of his concern about air pollution, and his mother is moving there soon. But a trucking company just north of the property is seeking a permit from the state to increase its air pollution.
"I do worry about my grandchildren," she said. One of her grandsons has severe asthma and allergies, at times requiring a nebulizer. "It's just something we've had to live with, and that's the terror of it," she said.
When LeBlanc's children were young she had a bag packed at all times in case an industrial accident happened and they needed to evacuate. "I lived in fear of just having to pick up my babies and run," she said. "I did everything I could for them and here it's come to the next generation."
Lylla Younes is a news apps developer for ProPublica's Local Reporting Network. She was previously a data reporter with New York Public Radio (WNYC) and Gothamist.